UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
☒      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20222023
OR
☐        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-41477
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Biohaven Ltd.
(Exact Name of Registrant as Specified in its Charter)
British Virgin Islands Not applicable
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)
c/o Biohaven Pharmaceuticals, Inc.
215 Church Street, New Haven, Connecticut 06510
(Address of principal executive offices) (Zip Code)
(203) 404-0410
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Shares, no par valueBHVNNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filer☐
Non-accelerated filer☒Small reporting company☒
 Emerging growth company☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 7, 2022,July 27, 2023, the registrant had 68,160,97968,317,078 common shares, without par value per share, outstanding.
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 TABLE OF CONTENTS
Page
Part IFinancial Information 
Item 1:
1
Item 2:
2425
Item 3:
3842
Item 4:
3842
Part IIOther Information 
Item 1:
4044
Item 1A:
4044
Item 2:
4044
Item 5.
4044
Item 6:
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4346







Form 10-Q Table of Contents
Part I.     Financial Information

Item 1.    Condensed CombinedConsolidated Financial Statements (Unaudited)

Index to Condensed Combined Consolidated Financial Statements (Unaudited)
Page
Condensed CombinedConsolidated Balance Sheets as of SeptemberJune 30, 20222023 and December 31, 20212022
2
Condensed CombinedConsolidated Statements of Operations and Comprehensive Loss for the three and ninesix months ended SeptemberJune 30, 20222023 and 20212022
3
Condensed CombinedConsolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20222023 and 20212022
54
Notes to Condensed CombinedConsolidated Financial Statements
65

1
Index to Condensed CombinedConsolidated Financial Statements
BIOHAVEN LTD.
CONDENSED COMBINEDCONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
September 30, 2022December 31, 2021June 30, 2023December 31, 2022
(Unaudited)(Unaudited)
AssetsAssetsAssets
Current assets:Current assets:Current assets:
Cash$50,668 $76,057 
Cash and cash equivalentsCash and cash equivalents$147,612 $204,877 
Marketable securitiesMarketable securities187,503 260,464 
Prepaid expensesPrepaid expenses17,910 6,734 Prepaid expenses27,654 20,945 
Income tax receivableIncome tax receivable8,656 46,139 
Restricted cash held on behalf of Former ParentRestricted cash held on behalf of Former Parent40,415 35,212 
Other current assetsOther current assets11,972 12,032 Other current assets22,278 19,331 
Total current assetsTotal current assets80,550 94,823 Total current assets434,118 586,968 
Property and equipment, netProperty and equipment, net17,423 13,010 Property and equipment, net17,277 17,512 
Intangible assetsIntangible assets18,400 18,400 Intangible assets18,400 18,400 
GoodwillGoodwill1,390 1,390 Goodwill1,390 1,390 
Other non-current assetsOther non-current assets17,883 14,438 Other non-current assets35,551 37,513 
Total assetsTotal assets$135,646 $142,061 Total assets$506,736 $661,783 
Liabilities and Equity
Liabilities and Shareholders' EquityLiabilities and Shareholders' Equity
Current liabilities:Current liabilities:Current liabilities:
Accounts payableAccounts payable$4,731 $4,775 Accounts payable$12,039 $10,703 
Due to Former ParentDue to Former Parent40,415 35,212 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities23,704 37,160 Accrued expenses and other current liabilities35,393 44,106 
Total current liabilitiesTotal current liabilities28,435 41,935 Total current liabilities87,847 90,021 
Long-term operating lease liabilityLong-term operating lease liability29,115 30,581 
Other non-current liabilitiesOther non-current liabilities6,995 5,435 Other non-current liabilities2,519 2,410 
Total liabilitiesTotal liabilities35,430 47,370 Total liabilities119,481 123,012 
Commitments and contingencies (Note 7)
Contingently redeemable non-controlling interests— 60,000 
Equity:
Commitments and contingencies (Note 11)Commitments and contingencies (Note 11)
Shareholders' Equity:Shareholders' Equity:
Preferred shares, no par value; 10,000,000 shares authorized, no shares issued and outstanding as of June 30, 2023 and December 31, 2022Preferred shares, no par value; 10,000,000 shares authorized, no shares issued and outstanding as of June 30, 2023 and December 31, 2022— — 
Common shares, no par value; 200,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 68,316,953 and 68,190,479 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectivelyCommon shares, no par value; 200,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 68,316,953 and 68,190,479 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively617,510 615,742 
Additional paid-in capitalAdditional paid-in capital21,687 13,869 
Accumulated deficitAccumulated deficit(251,962)(91,124)
Accumulated other comprehensive incomeAccumulated other comprehensive income20 284 
Net investment from Former Parent100,216 34,691 
Total equity100,216 34,691 
Total liabilities and equity$135,646 $142,061 
Total shareholders' equityTotal shareholders' equity387,255 538,771 
Total liabilities and shareholders' equityTotal liabilities and shareholders' equity$506,736 $661,783 
The accompanying notes are an integral part of these condensed combinedconsolidated financial statements.
2
Index to Condensed CombinedConsolidated Financial Statements
BIOHAVEN LTD.
CONDENSED COMBINEDCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Operating expenses:
Research and development$52,845 $46,973 $300,028 $139,668 
General and administrative14,792 8,519 54,492 28,349 
Total operating expenses67,637 55,492 354,520 168,017 
Loss from operations(67,637)(55,492)(354,520)(168,017)
Other income (expense):
Gain from equity method investment— — — 5,261 
Other expense, net— (5)(71)(245)
Total other (expense) income, net— (5)(71)5,016 
Loss before provision (benefit) for income taxes(67,637)(55,497)(354,591)(163,001)
Provision (benefit) for income taxes1,216 (1,132)14,581 (1,091)
Net loss and comprehensive loss attributable to common shareholders of Biohaven Ltd.$(68,853)$(54,365)$(369,172)$(161,910)
Net loss per share attributable to common shareholders of Biohaven Ltd. — basic and diluted$(1.75)$(1.38)$(9.38)$(4.11)
Common shares outstanding—basic and diluted39,368,042 39,368,042 39,368,042 39,368,042 
 Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
Operating expenses:
Research and development$79,490 $177,087 $142,951 $247,183 
General and administrative14,521 20,023 28,842 39,700 
Total operating expenses94,011 197,110 171,793 286,883 
Loss from operations(94,011)(197,110)(171,793)(286,883)
Other income (expense):
Other income (expense), net5,842 (67)14,071 (71)
Total other income (expense), net5,842 (67)14,071 (71)
Loss before provision for income taxes(88,169)(197,177)(157,722)(286,954)
Provision for income taxes2,177 6,110 3,116 13,365 
Net loss$(90,346)$(203,287)$(160,838)$(300,319)
Net loss per share — basic and diluted$(1.32)$(5.16)$(2.36)$(7.63)
Weighted average common shares outstanding—basic and diluted68,248,023 39,375,944 68,227,564 39,375,944 
Comprehensive loss:
Net loss$(90,346)$(203,287)$(160,838)$(300,319)
Other comprehensive loss, net of tax(146)— (264)— 
Comprehensive loss$(90,492)$(203,287)$(161,102)$(300,319)
 
The accompanying notes are an integral part of these condensed consolidatedfinancial statements.
3
Index to Condensed Consolidated Financial Statements
BIOHAVEN LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)

Six Months Ended June 30,
20232022
Cash flows from operating activities:
Net loss$(160,838)$(300,319)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash share-based compensation expense8,460 60,930 
Acquisition of IPR&D asset— 93,747 
Depreciation and amortization3,480 665 
Issuance of Former Parent common shares as payment for license and consulting agreements— 1,779 
Other non-cash items(3,682)— 
Changes in operating assets and liabilities:
Prepaid expenses and other assets39,283 (9,376)
Accounts payable1,336 1,602 
Accrued expenses and other liabilities(10,070)24,250 
Net cash used in operating activities(122,031)(126,722)
Cash flows from investing activities:
Proceeds from sales and maturities of marketable securities129,897 — 
Purchases of marketable securities(53,372)— 
Purchases of property and equipment(1,330)(1,250)
Payment for IPR&D asset acquisition— (35,000)
Net cash provided by (used in) investing activities75,195 (36,250)
Cash flows from financing activities:
Net transfers from Former Parent— 109,874 
Change in restricted cash due to Former Parent5,203 — 
Other1,126 — 
Net cash provided by financing activities6,329 109,874 
Effects of exchange rates on cash, cash equivalents, and restricted cash(147)— 
Net decrease in cash, cash equivalents, and restricted cash
(40,654)(53,098)
Cash, cash equivalents, and restricted cash at beginning of period242,604 77,057 
Cash, cash equivalents, and restricted cash at end of period$201,950 $23,959 
The accompanying notes are an integral part of these condensed combined financial statements.
3
Index to Condensed Combined Financial Statements
BIOHAVEN LTD.
CONDENSED COMBINED STATEMENTS OF CHANGES IN EQUITY
(Amounts in thousands)
(Unaudited)
Net Investment From Former Parent
Balance as of December 31, 2021$34,691 
Net loss(97,032)
Net transfers from Former Parent108,440 
Balance as of March 31, 202246,099 
Net loss(203,287)
Net transfers from Former Parent182,186 
Balance as of June 30, 202224,998 
Net loss(68,853)
Net transfers from Former Parent144,071 
Balance as of September 30, 2022$100,216 
Net Investment From Former Parent
Balance as of December 31, 2020$16,781 
Net loss(62,122)
Net transfers from Former Parent93,214 
Balance as of March 31, 202147,873 
Net loss(45,423)
Net transfers from Former Parent39,682 
Balance as of June 30, 202142,132 
Net loss(54,365)
Net transfers from Former Parent333,743 
Balance as of September 30, 2021$321,510 
The accompanying notes are an integral part of these condensed combinedconsolidated financial statements.
4
Index to Condensed Combined Financial Statements
BIOHAVEN LTD.
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)

Nine Months Ended September 30,
20222021
Cash flows from operating activities:
Net loss$(369,172)$(161,910)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense77,927 52,671 
Acquisition of IPR&D asset93,747 — 
Depreciation and amortization1,042 708 
Issuance of Former Parent common shares as payment for license and consulting agreements1,779 7,929 
Gain from equity method investment— (5,261)
Other non-cash items— (1,950)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets(11,367)(10,888)
Other non-current assets(4,299)(139)
Accounts payable(44)3,505 
Accrued expenses and other current liabilities(13,456)845 
Other non-current liabilities1,561 1,706 
Net cash used in operating activities(222,282)(112,784)
Cash flows from investing activities:
Purchases of property and equipment(5,774)(737)
Payment for IPR&D asset acquisition(35,000)— 
Cash acquired in business acquisition— 1,882 
Net cash (used in) provided by investing activities(40,774)1,145 
Cash flows from financing activities:
Net transfers from Former Parent237,417 390,437 
Other— 395 
Net cash provided by financing activities237,417 390,832 
Net (decrease) increase in cash and restricted cash
(25,639)279,193 
Cash and restricted cash at beginning of period77,057 83,506 
Cash and restricted cash at end of period$51,418 $362,699 
The accompanying notes are an integral part of these condensed combined financial statements.
5
Index to Condensed CombinedConsolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINEDCONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)

1.   Nature of the Business and Basis of Presentation
Biohaven Ltd. (“we,” “us," "our," "Biohaven" or the “Company”) was incorporated in Tortola, British Virgin Islands in May 2022. We areBiohaven is a global clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of life-changing therapies for people with debilitating neurologicalto treat a broad range of rare and neuropsychiatric diseases, including rare disorders.common diseases. The Company is advancing a pipeline of therapies with target indications, including epilepsy, mood disorders, Obsessive-Compulsive Disorder (“OCD”), Spinal Muscular Atrophy (“SMA”)for diseases, many of which have little or no treatment options, leveraging its proven drug development capabilities and pain disorders. Our neuroscience portfolio includes a broad pipeline of drug candidates modulating distinct nervous system targets,proprietary platforms, including Kv7 ion channels (“Kv7”),channel modulation for epilepsy and neuronal hyperexcitability, glutamate receptors, myostatin, and Transient Receptor Potential (“TRP”) channels.
Separation from Biohaven Pharmaceutical Holding Company Ltd.
On May 9, 2022, Biohaven Pharmaceutical Holding Company Ltd. (the "Former Parent"), Pfizer Inc. (“Pfizer”modulation for Obsessive-Compulsive Disorder ("OCD") and a wholly owned subsidiary of Pfizer (“Merger Sub”spinocerebellar ataxia ("SCA"), entered into an Agreement and Plan of Merger (the “Merger Agreement”), which provided for the acquisition by Pfizer of the Former Parent through the merger of Merger Sub with and into the Former Parent (the “Merger”). In connection with the Merger Agreement, the Former Parent and Biohaven Ltd. entered into a Separation and Distribution Agreement, dated as of May 9, 2022 (the “Distribution Agreement”). In connection with the Distribution Agreement, the Board of Directors of the Former Parent approved and directed the Former Parent’s management to effect the Spin-Off of the business, operations, and activities that are not the CGRP Business (as defined below), including the Kv7 ion channel activators, glutamate modulation, MPO inhibition and myostatin inhibition platforms, preclinicalfor neuromuscular diseases and metabolic disorders, and brain-penetrant Tyrosine Kinase 2/Janus Kinase 1 ("TYK2/JAK1") inhibition for neuroinflammatory disorders. Biohaven's portfolio of early- and late-stage product candidates also includes discovery research programs focused on TRPM3 channel activation for neuropathic pain, CD-38 antibody recruiting, bispecific molecules for multiple myeloma, antibody drug conjugates ("ADCs"), and certain corporate infrastructure currently owned by the Former Parent.
To implement the Spin-Off, the Former Parent transferred the related license agreements, intellectual propertytargeted extracellular protein degradation platform technology ("MoDE") with potential application in neurological disorders, cancer, and corporate infrastructure, including certain non-commercial employee agreements, share based awards and other corporate agreements (the "Business") to Biohaven Ltd., through a series of internal restructuring transactions. Descriptions of historical business activities in these Notes to Condensed Combined Financial Statements are presented as if these transfers had already occurred,
and the Former Parent’s activities related to such assets and liabilities had been performed by the Company.
On October 3, 2022, the Former Parent completed the distribution (the “Distribution”) to holders of its common shares of all of the outstanding common shares of Biohaven Ltd. and the spin-off of Biohaven from the Former Parent (the “Spin-Off”) described in Biohaven’s Information Statement (the “Information Statement”) attached as Exhibit 99.1 to Biohaven’s Registration Statement on Form 10, as amended (Reg. No. 001-41477), which was declared effective by the Securities and Exchange Commission ("SEC") on September 22, 2022 (the “Form 10”). Each holder of Former Parent common shares received one common share of Biohaven for every two Former Parent common shares held of record as of the close of business, New York City time, on September 26, 2022. In the Distribution, an aggregate of 35,832,557 Biohaven common shares were issued. As a result of the Distribution, Biohaven Ltd. became an independent, publicly traded company.
The Spin-Off generally resulted in (a) the Company directly or indirectly owning, assuming, or retaining certain assets and liabilities of the Former Parent and its subsidiaries related to the Former Parent’s pipeline assets and businesses and (b) the Former Parent directly or indirectly owning, assuming, or retaining all other assets and liabilities, including those associated with the Former Parent’s platform for the research, development, manufacture and commercialization of calcitonin gene-related receptor antagonists, including rimegepant, zavegepant and the Heptares Therapeutics Limited preclinical CGRP portfolio and related assets (the “CGRP Business”).autoimmune diseases.
The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts may require additional capital, additional personnel and infrastructure, and further regulatory and other capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.
Separation from Biohaven Pharmaceutical Holding Company Ltd.
On May 9, 2022, Biohaven Pharmaceutical Holding Company Ltd. (the "Former Parent"), Pfizer Inc. (“Pfizer”) and Bulldog (BVI) Ltd., a wholly owned
subsidiary of Pfizer (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), which provided for the acquisition by Pfizer of the Former Parent through the merger of Merger Sub with and into the Former Parent (the “Merger”). In connection with the Merger Agreement, the Former Parent and Biohaven entered into a Separation and Distribution Agreement, dated as of May 9, 2022 (the “Distribution Agreement”). In connection with the Distribution Agreement, the Board of Directors of the Former Parent approved and directed the Former Parent’s management to effect the Spin-Off (as defined below) of the business, operations, and activities that are not the CGRP Business (as defined below), including the Kv7 ion channel activators, glutamate modulation, MPO inhibition and myostatin inhibition platforms, preclinical product candidates, and certain corporate infrastructure currently owned by the Former Parent.
To implement the Spin-Off, the Former Parent transferred the related license agreements, intellectual property and corporate infrastructure, including certain non-commercial employee agreements, share based awards and other corporate agreements (the "Business") to Biohaven, through a series of internal restructuring transactions. Descriptions of historical business activities in these Notes to Condensed Consolidated Financial Statements are presented as if these transfers had already occurred, and the Former Parent’s activities related to such assets and liabilities had been performed by the Company.
On October 3, 2022, the Former Parent completed the distribution (the “Distribution”) to holders of its common shares of all of the outstanding common shares of Biohaven and the spin-off of Biohaven from the Former Parent (the “Spin-Off”) described in Biohaven’s Information Statement (the “Information Statement”) attached as Exhibit 99.1 to Biohaven’s Registration Statement on Form 10, as amended (Reg. No. 001-41477), which was declared effective by the Securities and Exchange Commission ("SEC") on September 22, 2022. Each holder of Former Parent common shares received one common share of Biohaven for every two Former Parent common shares held of record as of the close of business on September 26, 2022. In the Distribution, an aggregate of 35,840,459 Biohaven common shares were issued. The aggregate number of common shares issued in connection with the Distribution did not include 2,611,392 common shares to be issued in connection with Former Parent stock options that were exercised on October 3, 2022 and
65
Index to Condensed CombinedConsolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINEDCONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)



it is uncertain when, if ever,924,093 common shares to be issued in connection with Former Parent restricted stock units that vested on October 3, 2022. As a result of the Distribution, Biohaven became an independent, publicly traded company. Collectively, we refer to the Distribution and Spin-Off throughout this Quarterly Report on Form 10-Q as the "Separation."
The Separation generally resulted in (a) the Company will realize significant revenue from product sales.directly or indirectly owning, assuming, or retaining certain assets and liabilities of the Former Parent and its subsidiaries related to the Former Parent’s pipeline assets and businesses and (b) the Former Parent directly or indirectly owning, assuming, or retaining all other assets and liabilities, including those associated with the Former Parent’s platform for the research, development, manufacture and commercialization of calcitonin gene-related receptor antagonists, including rimegepant, zavegepant and the Heptares Therapeutics Limited preclinical CGRP portfolio and related assets (the “CGRP Business”).
Upon formationIn connection with the Separation, the Company entered into various agreements relating to transition services, licenses and through September 30, 2022, Biohaven Ltd. had 100 common shares of no par value outstanding.certain other matters with the Former Parent. For additional information regarding these agreements, see Note 13, "Related Party Transactions."
Basis of Presentation
The accompanyingOn October 3, 2022, the Company became a standalone publicly traded company, and its financial statements are now presented on a condensed consolidated basis. Prior to the Separation on October 3, 2022, the Company’s historical combined financial statements present,were prepared on a historicalstandalone basis the combined assets, liabilities, expenses and cash flows directly attributable to the Business, which have been preparedwere derived from the Former Parent’sParent's consolidated financial statements and accounting records, and are presented on a stand-alone basis as if the operations had been conducted independently from the Former Parent. Historically, separaterecords. The financial statements have not been prepared for all periods presented, including the historical results of the Company and it had not operatedprior to October 3, 2022, are now referred to as a standalone business from the Former Parent during the periods covered by the condensed combined financial statements.
The condensed combined financial statements"Condensed Consolidated Financial Statements," and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
Periods Prior to the Separation
For periods prior to the Separation, the condensed consolidated financial statements present, on a historical basis, the combined assets, liabilities, expenses and cash flows directly attributable to the Business, which have been prepared from the Former Parent’s consolidated financial statements and
accounting records, and are presented on a stand-alone basis as if the operations had been conducted independently from the Former Parent. The condensed combinedconsolidated financial statements of operations and comprehensive loss for periods prior to the Separation include all costs directly related to the Business, including costs for facilities, functions and services utilized by the Company. The condensed combinedconsolidated statements of operations and comprehensive loss for periods prior to the Separation also include allocations for various expenses related to the Former Parent’s corporate functions, including research and development, human resources, information technology, facilities, tax, shared services, accounting, finance and legal. These expenses were allocated on the basis of direct usage or benefit when specifically identifiable, with the remainder allocated on a proportional cost allocation method primarily based on employee labor hours or direct expenses. Management believes the assumptions underlying the condensed combinedconsolidated financial statements, including the expense methodology and resulting allocation, are reasonable for all periods presented. However, the allocations may not include all of the actual expenses that would have been incurred by the Company and may not reflect its combinedconsolidated results of operations, financial position and cash flows had it been a standalone company during the periods presented. It is not practicable to estimate actual costs that would have been incurred had the Company been a standalone company and operated as
an unaffiliated entity during the periods presented. Actual costs that might have been incurred had the Company been a standalone company would depend on a number of factors, including the chosen organizational structure, what corporate functions the Company might have performed directly or outsourced and strategic decisions the Company might have made in areas such as executive management, legal and other professional services, and certain corporate overhead functions.
The income tax amounts in the condensed combinedconsolidated financial statements have beenfor periods prior to the separation were calculated on a separate return method and are presented as if the Company’s operations were separate taxpayers in the respective jurisdiction. Therefore, tax expense, cash tax payments, and items of current and deferred taxes may not be reflective of the Company’s actual tax balances prior to or subsequent to the Distribution.
On October 3, 2022, the Company entered into several agreements with the Former Parent in connection with the Spin-Off, including a Transition Services Agreement, a United States Distribution Services Agreement and Outsourcing & Employee Transfer Agreements. For additional information regarding these agreements, see Note 10, Subsequent Events.
The Company expects to continue to incur certain costs to establish itself as a standalone public company, as well as ongoing additional costs associated with operating as an independent, publicly traded company.
The condensed combined balance sheets include assets and liabilities that have been determined to be specifically identifiable or otherwise attributableperiods prior to the Company, including certain assets that were historically held atSeparation, the corporate level in the Former Parent. All intracompany transactions within the Company have been eliminated. All intercompany transactions between the Company and the Former Parent are considered to be effectively settled in the condensed combined financial statements at the time the transactions are recorded. The total net effect of these intercompany transactions considered to be settled is reflected in the condensed combined statement of cash flows within financing activities and in the condensed combined balance sheets as “Net investment from Former Parent.” See Note 9, Related Party Transactions for additional information regarding related party transactions.
OurCompany's equity balance in these condensed combinedconsolidated financial statements represents the excess of total assets over liabilities. Net investment from Former Parent is primarily impacted by contributions from Former
76
Index to Condensed CombinedConsolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINEDCONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
1.   Nature of the Business and Basis of Presentation (Continued)
Parent, which are the result of net funding provided by or distributed to Former Parent.
Cash on As a result of the condensed combinedSeparation, the Company’s Net investment from Former Parent balance sheets represents cash balanceswas reclassified to common shares. The Net investment from Former Parent balance reclassified to common shares during the standalone entities establishedfourth quarter of 2022 included Separation-related adjustments of $27,811. The adjustments related primarily to operatedifferences in the Businessamount of assets and that were contributedliabilities transferred to the Company upon the Separation and the amount of the transferred assets and liabilities reported in connection with the Spin-Off. Ascompany’s combined balance sheet as of September 30, 2022, the Company was a co-obligor, jointly and severally with the Former Parent on its third-party long-term debt obligations with Sixth Street Specialty Lending, Inc. The Former Parent’s third-party long-term debt and related interest expense are not reflected2022. Additional Separation-related adjustments could be recorded in the condensed combined financial statements because the Company had not agreed to pay a specified amount of the borrowings on the basis of its arrangement with the Former Parent, nor was the Company expected to pay any portion of the Former Parent’s third-party debt, and the borrowings are not specifically identifiable to the Company. On October 3, 2022, an affiliate of Pfizer, on behalf of the Former Parent, repaid in full all of the indebtedness and other obligations and liabilities owed by the Former Parent, including prepayment penalties. In connection with the termination and repayment in full of the indebtedness and other obligations and liabilities under the Sixth Street Financing Agreement, all related liens and security interests granted by or arising under the Sixth Street Financing Agreement were automatically released and discharged. See Note 7, Commitments and Contingencies for additional information regarding debt.future periods.
Going Concern
In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed combinedconsolidated financial statements are issued.
Through November 9, 2022,July 31, 2023, the Company has funded its operations primarily with proceeds from Biohaven Pharmaceutical Holding Co. Ltd., its Former Parent, its recentproceeds from the public offering as discussedof its common shares in Note 10, Subsequent Events,October 2022, and the cash contribution received from the Former Parent at the DistributionSeparation as discussed below. The Company has incurred recurring losses since its inception and expects to continue to generate operating losses for the foreseeable future.
Pursuant to the Distribution Agreement, immediately prior to the Distribution, the Former Parent made a cash contribution to the Company which resulted in a cash balance of approximately $257,799 as
of October 3, 2022. Additionally, on October 25, 2022, the Company completed a public offering of its common shares which resulted in net proceeds to the Company of approximately $282,763. See Note 10, Subsequent Events, for further detail on the public offering. Accordingly, asAs of the date of issuance of these condensed combinedconsolidated financial statements, the Company expects its existing cash, cash equivalents and marketable securities will be sufficient to fund operating expenses, financial commitments and other cash requirements for at least one year after the issuance date of these financial statements. The Company’s future viability will be dependent on its ability to raise additional capital to finance its operations.
To execute its business plans, the Company will require funding to support its continuing operations and pursue its growth strategy. Until such time as the Company can generate significant revenue from product sales or royalties, if ever, it expects to finance its operations through the sale of public or private equity, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. The Company may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s shareholders. If the Company is unable to obtain funding, the Company could be forced
to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.
2.   Summary of Significant Accounting Policies
TheOur significant accounting policies used in preparation of these condensed combined financial statements for the three and nine months ended September 30, 2022 and 2021 are consistent with those discusseddescribed in Note 2 of the notes to the combinedconsolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 included in Exhibit 99.1 to the2022 (the "2022 Form 10.10-K"). Updates to our accounting policies including impacts from the adoption of new accounting standards, are discussed below in this Note 2.
Unaudited Interim Condensed CombinedConsolidated Financial Information
The accompanying unaudited condensed combinedconsolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
8
Index to Condensed Combined Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
2.   Summary of Significant Accounting Policies (Continued)


United States of AmericaGAAP for interim financial information. The accompanying unaudited condensed combinedconsolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of AmericaGAAP for complete combinedconsolidated financial statements. The accompanying year-end condensed combinedconsolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The unaudited interim condensed combinedconsolidated financial statements have been prepared on the same basis as the audited annual combinedconsolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of SeptemberJune 30, 2022 and2023, the results of its operations for the three and ninesix months ended SeptemberJune 30, 20222023 and 20212022, and its cash flows for the ninesix months ended SeptemberJune 30, 20222023 and 2021.2022. The results for the three and ninesix months ended SeptemberJune 30, 20222023 are not necessarily indicative of results to be expected for the year ending December 31, 2022,2023, any other interim periods or any future year or period.  The financial information included herein should be read in conjunction with the combined financial statements and notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 included in Exhibit 99.1 to the Form 10.2022.
Use of Estimates
The preparation of condensed combinedconsolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the combinedcondensed consolidated financial statements and
7
Index to Condensed Consolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
2.   Summary of Significant Accounting Policies (Continued)


the reported amounts of income and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed combinedconsolidated financial statements include, but are not limited to, the valuation of intangible assets, determining the allocations of costs and expenses from the Former Parent and the accrual for research and development expenses. In addition, management’s assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.
Restricted Cash
Acquired In-Process Research and Development
In-process research and development ("IPR&D") thatRestricted cash held on behalf of the Former Parent on the consolidated balance sheet as of June 30, 2023 represents cash held by the Company acquireson behalf of the Former Parent related to the execution of the United States Distribution Services Agreement (the “Distribution Services Agreement”). Pursuant to the terms of the Distribution Services Agreement, which was entered into by the Company and the Former Parent in conjunctionconnection with the acquisition of a business representsSeparation, the fair value assignedCompany is continuing to incomplete research projects which, atserve as the time of acquisition, have not reached technological feasibility. The amounts are capitalizedFormer Parent’s distributor and accountedagent for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonmentthe distribution of the projects. Upon successfulpharmaceutical product Nurtec ODT in the United States. As of June 30, 2023, the Company recorded a related payable of $40,415 as Due to Former Parent on the consolidated balance sheet as the balance was legally payable to the Former Parent. Refer to Note 13, "Related Party Transactions" for further information on the agreements entered into by the Company and the Former Parent in connection with the Separation.
Restricted cash included in other current assets as of June 30, 2023 consists primarily of restricted cash held in escrow for the cash portion of consideration to be paid in connection with our license agreement with Hangzhou Highlightll Pharmaceutical Co. Ltd. ("Highlightll") upon the completion of each project, the asset is classifiedcertain post-closing activities, which were not completed as a definite-lived intangible and the Company will make a determination asof June 30, 2023. Restricted cash included in other current assets also includes employee contributions to the then-useful life of the intangible asset, generally determined by the period in which the substantial majority of the cash flows are expected to be generated, and begin amortization.
The Company evaluates IPR&DCompany's employee share purchase plan held for impairment at least annually, or more frequently if impairment indicators exist, by performing a quantitative test that compares the fair value of the IPR&D intangible asset with its carrying value. If the fair value is less than the carrying amount, an impairment loss is recognized in operating results.
If we acquire an asset or group of assets that do not meet the definition of a business under applicable accounting standards, the acquired IPR&D is expensed on its acquisition date, unless it has an alternative future use. Future costs to develop these assets are recorded to research and development expense as they are incurred.
Net Loss Per Share
Net loss per share was calculated based on the 39,368,042 sharespurchases of the Company's common stock distributed tooutstanding shares. The Company did not have an employee share purchase plan as of June 30, 2022.
Restricted cash included in other non-current assets in the Former Parent's shareholders at the timeconsolidated balance sheets represents
collateral held by banks for a letter of the Distribution, including common sharescredit ("LOC") issued in connection with Former Parent stock options that were exercised on October 3, 2022the leased office space in Yardley, Pennsylvania and common sharesa LOC issued in connection with Former Parent restricted stock units that vested on October 3, 2022. The same number of shares is being utilizedthe leased office space in Cambridge, Massachusetts. See Note 11, ‘‘Commitments and Contingencies’’ for the calculation of basic and diluted earnings per share for all periods presented prior to the Spin-Off.
Recently Adopted Accounting Pronouncements
Effective January 1, 2022 the Company adopted ASU No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain
9
Index to Condensed Combined Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
2.   Summary of Significant Accounting Policies (Continued)


Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the Financial Accounting Standards Board ("FASB") Emerging Issues Task Force), which provides guidance on modifications or exchanges of a freestanding equity-classified written call option that is not within the scope of another topic. An entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument, and provides further guidance on measuring the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. ASU 2021-04 also provides guidanceadditional information on the recognitionreal estate leases.
The following represents a reconciliation of the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange on the basis of the substance of the transaction,cash and cash equivalents in the same mannercondensed consolidated balance sheets to total cash, cash equivalents and restricted cash as if cash had been paid as consideration. The guidance has been applied prospectivelyof June 30, 2023 and did not have a material effect onJune 30, 2022, respectively, in the combined financialcondensed consolidated statements of the Company.cash flows:
As of June 30, 2023As of June 30, 2022
Cash and cash equivalents$147,612 $23,209 
Restricted cash held on behalf of Former Parent40,415 — 
Restricted cash (included in other current assets)11,574 — 
Restricted cash (included in other non-current assets)2,349 750 
Total cash, cash equivalents and restricted cash at the end of the period in the condensed consolidated statement of cash flows$201,950 $23,959 
Recently Issued Accounting Pronouncements
In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, to clarify the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security. The ASU also introduced new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The amendments in ASU 2022-03 are effective for fiscal years beginning after December 15, 2023. The Company does not expect ASU No. 2022-03 to have a material effect on its combinedconsolidated financial statements.
3. Balance Sheet Components
Restricted Cash
Restricted cash primarily consists of collateral held by a bank for a letter of credit (“LOC”) issued in connection with the leased office space in Yardley, Pennsylvania. See Note 7 “Commitments and Contingencies” for additional information on the real estate lease. The following represents a reconciliation of cash in the condensed combined balance sheets to total cash and restricted cash as of September 30, 2022 and
September 30, 2021, respectively, in the condensed combined statements of cash flows:
As of September 30, 2022As of September 30, 2021
Cash$50,668 $361,699 
Restricted cash (included in other current assets)— 250 
Restricted cash (included in other assets)750 750 
Cash and restricted cash in the statements of cash flows$51,418 $362,699 

Other Current Assets
Other current assets consisted of the following:
As of September 30, 2022As of December 31, 2021
Accrued income tax receivable$11,340 $9,911 
Other632 2,121 
Other current assets$11,972 $12,032 
Property and Equipment, Net
Property and equipment, net consisted of the following:
As of September 30, 2022As of December 31, 2021
Building and land$12,297 $12,297 
Computer hardware and software1,200 1,200 
Office and lab equipment3,289 1,653 
Furniture and fixtures1,202 1,202 
$17,988 $16,352 
Accumulated depreciation(4,703)(3,342)
13,285 13,010 
Equipment not yet in service4,138 — 
Property and equipment, net$17,423 $13,010 
Depreciation expense was $230 and $718 for the three and nine months ended September 30, 2022, respectively, and $172 and $501 for the three and nine months ended September 30, 2021, respectively.
As of both September 30, 2022 and December 31, 2021, computer software costs included in property and
108
Index to Condensed CombinedConsolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINEDCONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
3. Marketable Securities
The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of debt securities available-for-sale by type of security at June 30, 2023 and December 31, 2022 were as follows:
Amortized CostAllowance for Credit LossesNet Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
June 30, 2023
Debt securities
U.S. corporate bonds$97,143 $— $97,143 $— $(194)$96,949 
Foreign corporate bonds34,446 — 34,446 — (41)34,405 
U.S. treasury bills28,842 — 28,842 2 (5)28,839 
U.S. agency bonds27,334 — 27,334 — (24)27,310 
Total$187,765 $— $187,765 $2 $(264)$187,503 
December 31, 2022
Debt securities
U.S. corporate bonds$142,697 $— $142,697 $25 $(135)$142,587 
Foreign corporate bonds36,766 — 36,766 9 (32)36,743 
U.S. treasury bills89,308 — 89,308 17 (5)89,320 
U.S. agency bonds41,734 — 41,734 — (24)41,710 
Total$310,505 $— $310,505 $51 $(196)$310,360 
The fair value of debt securities available-for-sale by classification in the condensed consolidated balance sheets was as follows:
June 30, 2023December 31, 2022
Cash and cash equivalents$— $49,896 
Marketable securities187,503 260,464 
Total$187,503 $310,360 
The net amortized cost and fair value of debt securities available-for-sale at June 30, 2023 and December 31, 2022 are shown below by contractual maturity. Actual maturities may differ from contractual maturities because securities may be restructured, called or prepaid, or the Company intends to sell a security prior to maturity.
June 30, 2023December 31, 2022
Net Amortized CostFair ValueNet Amortized CostFair Value
Due to mature:
Less than one year$187,765 $187,503 $310,505 $310,360 
9
Index to Condensed Consolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
3.  Marketable Securities (Continued)

Summarized below are the debt securities available-for-sale the Company held at June 30, 2023 and December 31, 2022 that were in an unrealized loss position, aggregated by the length of time the investments have been in that position:
Less than 12 months
Number of SecuritiesFair ValueUnrealized Losses
June 30, 2023
Debt securities
U.S. corporate bonds17 $96,949 $(194)
Foreign corporate bonds5 34,405 (41)
U.S. treasury bills2 11,877 (5)
U.S. agency bonds3 27,310 (24)
Total27$170,541 $(264)
December 31, 2022
Debt securities
U.S. corporate bonds16 $104,508 $(135)
Foreign corporate bonds3 31,886 (32)
U.S. treasury bills1 9,762 (5)
U.S. agency bonds4 41,710 (24)
Total24 $187,866 $(196)
The Company did not have any investments in a continuous unrealized loss position for more than twelve months as of June 30, 2023 and December 31, 2022.
The Company reviewed the securities in the table above and concluded that they are performing assets, considering factors such as the credit quality of the investment security based on research performed by external rating agencies and the prospects of realizing the carrying value of the security based on the investment’s current prospects for recovery. As of June 30, 2023, the Company did not intend to sell these securities and did not believe it was more likely than not that it would be required to sell these securities prior to the anticipated recovery of their amortized cost basis.
Net Investment Income
Gross investment income includes income from debt securities available-for-sale, money-market funds, cash and restricted cash. Sources of net investment income included in other income (expense), net in the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2023 were as follows:
Three Months Ended June 30,Six Months Ended June 30,
20232023
Gross investment income$4,183 $8,400 
Investment expenses(68)(138)
Net investment income (excluding net realized capital losses)4,115 8,262 
Net realized capital losses(17)(39)
Net investment income$4,098 $8,223 
The Company had no investment income during the three and six months ended June 30, 2022.
10
Index to Condensed Consolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
3.  Marketable Securities (Continued)

We utilize the specific identification method in computing realized gains and losses. The proceeds from the sale of available-for-sale debt securities and the related gross realized capital losses for the three and six months ended June 30, 2023 were as follows:
Three Months Ended June 30,Six Months Ended June 30,
20232023
Proceeds from sales$2,464 $4,920 
Gross realized capital losses17 $39 
The Company had no proceeds from the sale of available-for-sale debt securities and the related gross realized capital gains and losses for the three and six months ended June 30, 2022.
4.   Fair Value of Financial Assets and Liabilities
The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires certain assets and liabilities to be reflected at their fair value and others to be reflected on another basis, such as an adjusted historical cost basis. In this note, the Company provides details on the fair value of financial assets and liabilities and how it determines those fair values.
Financial Instruments Measured at Fair Value on the Condensed Consolidated Balance Sheets
Certain assets of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
•Level 1 — Quoted prices in active markets for identical assets or liabilities.
•Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.
•Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.
11
Index to Condensed Consolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
4.   Fair Value of Financial Assets and Liabilities (Continued)
Financial assets measured at fair value on a recurring basis on the condensed consolidated balance sheets at June 30, 2023 and December 31, 2022 were as follows:
Fair Value Measurement Using:
Balance Sheet ClassificationType of InstrumentLevel 1Level 2Level 3Total
June 30, 2023
Assets:
Cash and cash equivalentsMoney market funds$44,443 $— $— $44,443 
Marketable securitiesU.S. treasury bills6,950 21,889 — 28,839 
Marketable securitiesU.S. corporate bonds— 96,949 — 96,949 
Marketable securitiesU.S. agency bonds— 27,310 — 27,310 
Marketable securitiesForeign corporate bonds— 34,405 — 34,405 
Other non-current assetsMoney market funds1,851 — — 1,851 
Total assets$53,244 $180,553 $— $233,797 
December 31, 2022
Assets:
Cash and cash equivalentsMoney market funds$72,866 $— $— $72,866 
Cash and cash equivalentsU.S. treasury bills— 39,948 — 39,948 
Cash and cash equivalentsU.S. corporate bonds— 9,948 — 9,948 
Marketable securitiesU.S. treasury bills— 49,372 — 49,372 
Marketable securitiesU.S. corporate bonds— 132,639 — 132,639 
Marketable securitiesU.S. agency bonds— 41,710 — 41,710 
Marketable securitiesForeign corporate bonds— 36,743 — 36,743 
Total assets$72,866 $310,360 $— $383,226 
The Company had no financial liabilities measured at fair value on a recurring basis on the condensed consolidated balance sheets at June 30, 2023 and December 31, 2022.
There were no securities transferred into or out of Level 3 during the three and six months ended June 30, 2023 or 2022.
The following is a description, including valuation methodology, of the financial assets and liabilities measured at fair value on a recurring basis:
Cash Equivalents
Cash equivalents at June 30, 2023 consisted of cash invested in short-term money market funds and debt securities with an original maturity of 90 days or less at the date of purchase. The carrying value of cash equivalents approximates fair value as maturities are less than three months. When quoted prices are available in an active market, cash equivalents are classified in Level 1 of the fair value hierarchy. Fair values of cash equivalent instruments that do not trade on a regular basis in active markets are classified as Level 2.
Marketable Securities
Quoted prices for identical assets in active markets are considered Level 1 and consist of on-the-run U.S. Treasuries and money market funds. The fair values of the Company’s Level 2 debt securities are obtained from quoted market prices of debt securities with similar characteristics, quoted prices from identical assets in inactive markets, or discounted cash flows to estimate fair value. On a quarterly basis, the Company compares the prices of its Level 2 debt
12
Index to Condensed Consolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
4.   Fair Value of Financial Assets and Liabilities (Continued)
securities to prices provided by a secondary source. Variances over a specified threshold are identified and reviewed to confirm the price provided by the primary source represents an appropriate estimate of fair value. The Company did not adjust any of the prices at June 30, 2023.
5. Balance Sheet Components (Continued)
Property and Equipment, Net
Property and equipment, net consisted of the following:
As of June 30, 2023As of December 31, 2022
Building and land$12,399 $12,297 
Computer hardware and software780 780 
Office and lab equipment8,580 5,501 
Furniture and fixtures1,202 1,202 
$22,961 $19,780 
Accumulated depreciation(6,478)(4,914)
16,483 14,866 
Equipment not yet in service794 2,646 
Property and equipment, net$17,277 $17,512 
Depreciation expense was $800 and $1,564 for the three and six months ended June 30, 2023 and $279 and $488 for the three and six months ended June 30, 2022, respectively.
As of June 30, 2023 and December 31, 2022, computer software costs included in property and equipment were $760 and $760, net of accumulated amortization of $401$591 and $211,$464, respectively. Depreciation and amortization expense for capitalized computer software costs were not material for the three and ninesix months ended SeptemberJune 30, 20222023 or 2021.2022.
Equipment not yet in service primarily consisted of lab equipment that had not been placed into service as of SeptemberJune 30, 2023 and December 31, 2022.
Other Non-current Assets
Other non-current assets consisted of the following:
As of September 30, 2022As of December 31, 2021
Series A-2 Preferred Stock Investment$10,000 $6,000 
Operating lease right-of-use assets6,915 5,222 
Other968 3,216 
Other non-current assets$17,883 $14,438 
In December 2020, the Company entered into a Series A-2 Preferred Stock Purchase Agreement with Artizan Biosciences Inc. (“Artizan”). Under the agreement, the Company paid Artizan 61,494 shares of the Former Parent’s common shares valued at $6,000, which were issued in January 2021. In exchange, the Company acquired 34,472,031 shares of series A-2 preferred stock of Artizan. In June 2022, the Company entered into an Amendment to the Series A-2 Preferred Stock Purchase Agreement with Artizan. Under the Amendment, the Company made a cash payment of $4,000 in exchange for 22,975,301 additional shares of series A-2 preferred stock of Artizan. The Company determined that it was not practical to estimate the fair value of this investment as it represents Series A-2 Preferred Stock of an unlisted company. On a routine basis the Company will determine if additional preferred shares of the unlisted company have been issued and will adjust the carrying value of its Series A-2 Preferred Stock investment accordingly. See Note 6 “License
As of June 30, 2023As of December 31, 2022
Operating lease right-of-use assets$33,200 $34,928 
Other2,351 2,585 
Other non-current assets$35,551 $37,513 
Agreements” for additional details on the Artizan Agreement.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
As of September 30, 2022As of December 31, 2021
Accrued employee compensation and benefits$7,538 $9,538 
Accrued clinical trial costs10,871 24,051 
Other accrued expenses and other current liabilities5,295 3,571 
 Accrued expenses and other current liabilities$23,704 $37,160 
Contingently Redeemable Non-controlling Interest
In September 2020, the Company's Asia-Pacific subsidiary, BioShin Limited (“BioShin”), authorized, issued and sold 15,384,613 BioShin Series A Preferred Shares at a price of $3.90 per share for a total of $60,000 to a group of investors led by OrbiMed, with participation from Cormorant Asset Management LLC, HBM Healthcare Investments Ltd, Surveyor Capital (a Citadel Company), and Suvretta Capital Management, LLC (the "BioShin Investors"). The BioShin Series A Preferred Shares contained both a call option by the Company and a put option held by the BioShin Investors. Due to the contingently redeemable features, the Company had classified the BioShin Series A Preferred Shares in mezzanine equity since the redemption was out of the Company's control.
In November 2021, the Company, Biohaven Therapeutics Ltd. (“BTL”), Atlas Merger Sub and BioShin entered into an Agreement and Plan of Merger (the “BioShin Merger Agreement”). The BioShin Merger Agreement provided for the merger of Atlas Merger Sub with and into BioShin, with BioShin surviving the merger as a wholly owned indirect subsidiary of the Former Parent, in accordance with Section 233 of the Cayman Islands Companies Act. As a result of the satisfaction of the closing conditions described in the BioShin Merger Agreement, on January 6, 2022, each Series A convertible preferred share of BioShin, no par value, other than Excluded Shares (as defined in the BioShin Merger Agreement), was converted into the right to receive 0.080121 of the Former Parent’s common shares and was removed from mezzanine equity. No Series A convertible preferred shares of BioShin were outstanding following the closing.
11
Index to Condensed Combined Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)

4.   Acquisitions
Acquisition of Kleo Pharmaceuticals, Inc.
On January 4, 2021, the Company acquired Kleo Pharmaceuticals, Inc. (“Kleo”). Kleo is a development-stage biopharmaceutical company focused on advancing the field of immunotherapy by developing small molecules that emulate biologics. The transaction was accounted for as the acquisition of a business using the acquisition method of accounting.
The total fair value of the consideration transferred was $20,043 which primarily consisted of the issuance of a total of 115,836 common shares of the Former Parent to Kleo stockholders and contingent consideration in the form of a contingent value right to receive one dollar in cash for each Kleo share if certain specified Kleo biopharmaceutical products or product candidates receive the approval of the Food and Drug Administration (the "FDA") prior to the expiration of 30 months following the effective time of the transaction. The maximum amount payable pursuant to the contingent value right was approximately $17,300. At December 31, 2021, the Company determined the value of the contingent value right to be immaterial and recognized a gain of $1,457 related to the contingent value right in other income (expense) during the fourth quarter of 2021. The value of the contingent value right continues to be immaterial with no value included on the condensed combined balance sheet as of September 30, 2022.
Prior to the consummation of the transaction, the Company owned approximately 41.9% of the outstanding shares of Kleo and accounted for it as an equity method investment. As part of the transaction, the Company acquired the remainder of the shares of Kleo, and post-transaction the Company owns 100% of the outstanding shares of Kleo. The carrying value of the Company’s investment in Kleo was $1,176 immediately prior to the acquisition date. The Company determined the fair value of the existing interest was $6,437, and recognized a gain from our equity method investment during the first quarter of 2021 of $5,261 on the condensed combined statements of operations and comprehensive loss as a result of remeasuring to fair value the existing equity interest in Kleo.
In connection with the transaction, we recorded: net working capital of $573; property, plant and equipment of $1,257; intangible assets consisting of in progress research and development assets of $18,400 which include an oncology therapeutic candidate entering Phase I clinical trials and a COVID-19 therapeutic candidate in the planning stage for clinical
As of June 30, 2023As of December 31, 2022
Accrued employee compensation and benefits$9,227 $14,603 
Accrued clinical trial costs18,539 17,788 
Other accrued expenses and other current liabilities7,627 11,715 
 Accrued expenses and other current liabilities$35,393 $44,106 
development; debt assumed of $1,577; and goodwill of $1,390.
Kleo’s employees, other than its President and Chief Financial Officer, were retained as part of the transaction. In connection with the transaction agreement, the Former Parent filed a registration statement permitting Kleo stockholders to offer and sell the common shares of the Former Parent issued in the transaction.6.   Acquisitions
Kv7 Platform Acquisition
In April 2022, the Company closed the acquisition from Knopp Biosciences LLC (“Knopp”) of Channel Biosciences, LLC (“Channel”), a wholly owned subsidiary of Knopp owning the assets of Knopp’s Kv7 channel targeting platform (the “Kv7 Platform Acquisition”), pursuant to a Membership Interest Purchase Agreement (the “Purchase Agreement”), dated February 24, 2022.
In consideration for the Kv7 Platform Acquisition, on April 4, 2022, the Company made an upfront payment comprised of $35,000 in cash and 493,254 common shares, valued at approximately $58,747, issued through a private placement. The Company has also agreed to pay additional success-based payments comprised of (i) up to $325,000 based on developmental and regulatory milestones through approvals in the United States, EMEA and Japan for the lead asset, BHV-7000 (formerly known as KB-3061), (ii) up to an additional $250,000 based on developmental and regulatory milestones for the Kv7 pipeline development in other indications and additional country approvals, and (iii) up to $562,500 for commercial sales-based milestones of BHV-7000. Additionally, the Company has agreed to make scaled royalty payments in cash for BHV-7000 and the pipeline programs, starting at high single digits and peaking at low teens for BHV-7000 and starting at mid-single digits and peaking at low tens digits for the pipeline programs.
The Company accounted for this purchase as an asset acquisition as substantially all of the fair value of the gross assets acquired was concentrated in a single
13
Index to Condensed Consolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
6.   Acquisitions (Continued)


identifiable asset, IPR&D. The IPR&D asset has no alternative future use and relates to intellectual property rights related to the Kv7 platform lead, now BHV-7000. There was no material value assigned to any other assets or liabilities acquired in the acquisition. As such, during the second quarter of 2022, the Company recorded a charge to research and development ("R&D") expense in the accompanying condensed combinedconsolidated statements of operations and comprehensive loss of $93,747.
12
Index to Condensed Combined Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
4.   Acquisitions (Continued)


During the nine months ended September 30,second quarter of 2022, the Company recorded $25,000 to R&D expense in the condensed combined
consolidated statements of operations and comprehensive loss for a regulatory milestone payment which became duemade to Knopp during the second quarter.Knopp.
Excluding the milestone payment noted above, the Company has not recorded any of the possible contingent consideration payments to Knopp as a liability in the accompanying condensed combinedconsolidated balance sheet as none of the future events which would trigger a milestone payment were considered probable of occurring at SeptemberJune 30, 2022.2023.
5. Share-Based Compensation
20227.   Shareholders' Equity Incentive Plan
In September 2022, the Company's shareholders approved the 2022 Equity Incentive Plan (the "2022 Plan"), which became effective on October 3, 2022. The 2022 Plan providesChanges in shareholders’ equity for the grant of incentive share options, nonstatutory share options, share appreciation rights, restricted share awards, restricted share unit awards ("RSUs"), performance-based share awardsthree and other share-based awards. Additionally, thesix months ended June 30, 2023 and June 30, 2022 Plan provides for the grant of performance cash awards. Upon the effectiveness of the 2022 Plan, there were 9,190,000 common shares reserved for issuance under the 2022 Plan,
Legacy Equity Award Settlement Plan
In September 2022, the Company's shareholders approved the Legacy Equity Award Settlement Plan (the "Legacy Plan"), which became effective on September 29, 2022. The Legacy Plan is intended solely to provide for the grant and settlement of nonstatutory share options and RSUs, issued in respect of stock options and RSUs originally granted pursuant to the Former Parent's 2017 Equity Incentive Plan and 2014 Equity Incentive Plan.
On October 3, 2022, the Former Parent completed the Distribution and the Spin-Off. Each Former Parent stock option and RSU outstanding prior to the Distribution was converted into .5 stock options and RSUs, respectively, in the Company. In total, 4,057,121 stock options and 924,093 RSUs were granted and settled into 2,611,392 and 924,093 common shares, respectively, under the Legacy Plan on October 3, 2022.
2022 Employee Share Purchase Plan
In September 2022, the Company's board of directors approved the rules and procedures of the 2022 Employee Share Purchase Plan (the "ESPP") approved
by shareholders of the Company on September 28, 2022. The ESPP allows each eligible employee who is participating in the plan to purchase shares by authorizing payroll deductions of up to 15% of eligible earnings. Upon the effectiveness of the ESPP, 393,769 shares were authorized to be issued under purchase rights granted to eligible employees.
Share-based Compensation Expense
The Former Parent had share-based compensation plans under which it issued common shares or restricted common shares, and granted incentive stock options or nonqualified stock options for the purchase of common shares, to employees, members of the board of directors and consultants of the Former Parent. The Former parent also had an Employee Share Purchase Plan which allowed eligible employees who were participating in the plan to purchase shares of The Former Parent at a discount.
Share-based compensation has been allocated to the Company by using a combination of specific identification and a proportionate cost allocation method based on employee hours or directly identified operating expenses, depending on the employee’s function. The amounts presented are not necessarily indicative of future awards and do not necessarily reflect the costs that the Company would have incurred as an independent company for the periods presented.
Share-based compensation under the Former Parent’s share-based compensation plans is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period of the award (generally three to four years) using the straight-line method. Share-based compensation expense attributed to the Company by classification included in the condensed combined statements of operations and comprehensive loss was as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Research and development expenses$9,722 $10,187 $46,976 $32,085 
General and administrative expenses7,275 5,206 30,951 20,586 
Total non-cash share-based compensation expense$16,997 $15,393 $77,927 $52,671 
Common Shares
SharesAmountNet Investment from Former ParentAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive IncomeTotal Shareholders' Equity
Balances as of December 31, 202268,190,479 $615,742 $— $13,869 $(91,124)$284 $538,771 
Issuance of common shares under equity incentive plan22,000 504 — (172)— — 332 
Non-cash share-based compensation expense— — — 3,765 — — 3,765 
Net loss— — — — (70,492)— (70,492)
Other comprehensive loss— — — — — (118)(118)
Balances as of March 31, 202368,212,479 616,246 — 17,462 (161,616)166 472,258 
Issuance of common shares under equity incentive plan and employee share purchase plan104,474 1,264 — (470)— — 794 
Non-cash share-based compensation expense— — — 4,695 — — 4,695 
Net loss— — — — (90,346)— (90,346)
Other comprehensive loss— — — — — (146)(146)
Balances as of June 30, 202368,316,953 $617,510 $— $21,687 $(251,962)$20 $387,255 
Common Shares
SharesAmountNet Investment from Former ParentAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive IncomeTotal Shareholders' Equity
Balance as of December 31, 2021— $— $34,691 $— $— $— $34,691 
Net loss— — (97,032)— — — (97,032)
Net transfers from Former Parent— — 108,440 — — — 108,440 
Balance as of March 31, 2022— — 46,099 — — — 46,099 
Net loss— — (203,287)— — — (203,287)
Net transfers from Former Parent— — 182,186 — — — 182,186 
Balance as of June 30, 2022— $— $24,998 $— $— $— $24,998 
1314
Index to Condensed CombinedConsolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINEDCONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
8. Accumulated Other Comprehensive Income
Shareholders’ equity included the following activity in accumulated other comprehensive income (loss) for the three and six months ended June 30, 2023:
Three Months Ended June 30, 2023Six Months Ended June 30, 2023
Net unrealized investment gains (losses):
Beginning of period balance$(278)$(145)
Other comprehensive loss before reclassifications(1)
(1)(156)
Amounts reclassified from accumulated other comprehensive loss(1)(2)
17 39 
Other comprehensive income (loss)(1)
16 (117)
End of period balance(262)(262)
Foreign currency translation adjustments:
Beginning of period balance444 429 
Other comprehensive loss(1)
(162)(147)
End of period balance282 282 
Total beginning of period accumulated other comprehensive income166 284 
Total other comprehensive loss(146)(264)
Total end of period accumulated other comprehensive income$20 $20 

(1) There was no tax on other comprehensive income (loss) and immaterial tax on amounts reclassified from accumulated other comprehensive income (loss) during the period.
(2) Amounts reclassified from accumulated other comprehensive income (loss) for specifically identified debt securities are included in other income (expense), net on the condensed consolidated statement of operations.
The Company had no accumulated other comprehensive income (loss) included in shareholder's equity as of June 30, 2022 and no amounts reclassified from accumulated other comprehensive income (loss) during the three and six months ended June 30, 2022.
9.   Net Loss Per Share
Basic and diluted net loss per share attributable to common shareholders of Biohaven was calculated as follows:
 Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Numerator:  
Net loss$(90,346)$(203,287)$(160,838)$(300,319)
Denominator:
Weighted average common shares outstanding—basic and diluted(1)
68,248,023 39,375,944 68,227,564 39,375,944 
Net loss per share — basic and diluted$(1.32)$(5.16)$(2.36)$(7.63)
(1)     Prior to the Spin-Off from the Former Parent on October 3, 2022, Biohaven did not operate as an independent company. At the time of the Distribution, 39,375,944 shares of the Company's common stock were distributed to the Former Parent's shareholders, including common shares issued in connection with Former Parent share options that were exercised on October 3, 2022 and common shares issued in connection with Former Parent restricted share units that vested on October 3, 2022. This number of shares is being utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Spin-Off.
The Company's potential dilutive securities include share options which have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common shareholders of the Company is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common shareholders for the periods indicated because including them would have had an anti-dilutive effect:
As of June 30,
2023
Options to purchase common shares9,639,557 
10.  License Agreements
The following is a summary of all license agreements that the Company has entered into. As of June 30, 2023, the Company has potential future developmental, regulatory and commercial milestone
6.15
Index to Condensed Consolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
10.  License Agreements (Continued)
payments under these agreements of up to approximately $125,050, $547,350, and $1,270,450, respectively. As of June 30, 2023 the Company has not made any material developmental, regulatory or commercial milestone payments under these agreements.
Yale Agreements
In September 2013, the Company entered into an exclusive license agreement (the "Yale Agreement") with Yale University to obtain a license to certain patent rights for the commercial development, manufacture, distribution, use and sale of products and processes resulting from the development of those patent rights, related to the use of riluzole in treating various neurological conditions, such as general anxiety disorder, post-traumatic stress disorder and depression.
The Yale Agreement was amended and restated in May 2019. As amended, the Company agreed to pay Yale University up to $2,000 upon the achievement of specified regulatory milestones and annual royalty payments of a low single-digit percentage based on net sales of riluzole-based products from the licensed patents or from products based on troriluzole. Under the amended and restated agreement, the royalty rates are reduced as compared to the original agreement. In addition, under the amended and restated agreement, the Company may develop products based on riluzole or troriluzole. The amended and restated agreement retains a minimum annual royalty of up to $1,000 per year, beginning after the first sale of product under the agreement. If the Company grants any sublicense rights under the Yale Agreement, it must pay Yale University a low single-digit percentage of sublicense income that it receives.
For the three and ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company did not record any material expense or make any milestone or royalty payments under the Yale Agreement.
In January 2021, the Company entered into a worldwide, exclusive license agreement with Yale University for the development and commercialization of a novel Molecular Degrader of Extracellular Protein ("MoDE") platform (the "Yale MoDE Agreement"). Under the Yale MoDE Agreement, the Company acquired exclusive, worldwide rights to Yale University's intellectual property directed to its MoDE platform. The platform pertains to the clearance of disease-causing protein and other biomolecules by targeting them for lysosomal degradation using multi-functional molecules. As part of consideration for this license, the
Company paid Yale University an upfront cash payment of $1,000 and 11,668 common shares of the Former Parent valued at approximately $1,000. Under the Yale MoDE Agreement, the Company may develop products based on the MoDE platform. The Yale MoDE Agreement
includes an obligation to pay a minimum annual royalty of up to $1,000 per year, and low single digit royalties on the net sales of licensed products. If the Company grants any sublicense rights under the Yale MoDE Agreement, it must pay Yale University a low single-digit percentage of sublicense income that it receives. In addition, Yale University will be eligible to receive additional development milestone payments of up to $800 and commercial milestone payments of up to $2,950. The Yale MoDE Agreement terminates on the later of twenty years from the effective date, twenty years from the filing date of the first investigational new drug application for a licensed product or the last to expire of a licensed patent.
Under the Yale MoDE Agreement, the Company entered into a sponsored research agreement (the “Yale MoDE SRA”), which includedincludes funding of up to $4,000 over the life of the agreement.
ExcludingThe Company recorded research and development expense related to the upfront payments above,Yale MoDE SRA of $333 and $666 for the three and six months ended June 30, 2023. For the three and six months ended June 30, 2022, the Company recorded research and development expense related to the Yale MoDE AgreementSRA of $333$334 and $2,333 for the three and nine months ended September 30, 2022, respectively, and $0 and $150 for the three and nine months ended September 30, 2021,$2,000, respectively. For the three and ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company did not makerecord any material milestone or royalty payments under the Yale MoDE Agreement.SRA.
In May 2023, the Company entered into an additional sponsored research agreement with Yale University (the "2023 Yale SRA"), which included funding of up to $612 over the life of the agreement. For the three and six months ended June 30, 2023, the Company recorded $153 in research and development expense related to the 2023 Yale SRA.
ALS Biopharma Agreement
In August 2015, the Company entered into an agreement (the "ALS Biopharma Agreement") with ALS Biopharma and Fox Chase Chemical Diversity Center Inc. ("FCCDC"), pursuant to which ALS Biopharma and FCCDC assigned the Company their worldwide patent rights to a family of over 300 prodrugs of glutamate modulating agents, including troriluzole, as well as other innovative technologies. Under the ALS Biopharma Agreement, the Company is obligated to use commercially reasonable efforts to commercialize and
16
Index to Condensed Consolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
10.  License Agreements (Continued)
develop markets for the patent products. The Company is obligated to pay $3,000 upon the achievement of specified regulatory milestones with respect to the first licensed product and $1,000 upon the achievement of specified regulatory milestones with respect to subsequently developed products, as well as royalty payments of a low single-digit percentage based on net sales of products licensed under the ALS Biopharma Agreement, payable on a quarterly basis.
The ALS Biopharma Agreement terminates on a country-by-country basis as the last patent rights expire in each such country. If the Company abandons its development, research, licensing or sale of all products
14
Index to Condensed Combined Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
6.  License Agreements (Continued)
covered by one or more claims of any patent or patent application assigned under the ALS Biopharma Agreement, or if the Company ceases operations, it has agreed to reassign the applicable patent rights back to ALS Biopharma.
For the three and ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company did not record any expense or make anymaterial milestone or royalty payments under the ALS Biopharma Agreement.
2016 AstraZeneca Agreement
In October 2016, the Company entered into an exclusive license agreement (the "2016 AstraZeneca Agreement") with AstraZeneca, pursuant to which AstraZeneca granted the Company a license to certain patent rights for the commercial development, manufacture, distribution and use of any products or processes resulting from development of those patent rights, including BHV-5000 and BHV-5500. In exchange for these rights, the Company agreed to pay AstraZeneca an upfront payment, milestone payments and royalties on net sales of licensed products under the agreement. The regulatory milestones due under the 2016 AstraZeneca Agreement depend on the indication of the licensed product being developed as well as the territory where regulatory approval is obtained.
DevelopmentRegulatory milestones due under the 2016 AstraZeneca Agreement with respect to Rett syndrome total up to $30,000, and, for any indication other than Rett syndrome, total up to $60,000. Commercial milestones are based on net sales of all products licensed under the 2016 AstraZeneca Agreement and total up to $120,000. The Company has also agreed to pay royalties in two tiers, with each tiered royalty in the range from 0-10% of net sales of products licensed under the 2016 AstraZeneca Agreement. If the Company receives revenue from sublicensing any of its rights under the 2016 AstraZeneca Agreement, the Company is also obligated to pay a portion of that revenue to
AstraZeneca. The Company is also required to reimburse AstraZeneca for any fees that AstraZeneca incurs related to the filing, prosecution, defending, and maintenance of patent rights licensed under the 2016 AstraZeneca Agreement.
The 2016 AstraZeneca Agreement expires upon the expiration of the patent rights under the agreement or on a country-by-country basis ten years after the first commercial sale and can also be terminated if certain events occur, e.g., material breach or insolvency.
For the three and ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company did not record any expense
or make anymaterial milestone or royalty payments under the 2016 AstraZeneca Agreement.
2018 AstraZeneca License Agreement
In September 2018, the Company entered into an exclusive license agreement (the "2018 AstraZeneca Agreement") with AstraZeneca, pursuant to which AstraZeneca granted the Company a license to certain patent rights for the commercial development, manufacture, distribution and use of any products or processes resulting from development of those patent rights, including BHV-3241 (verdiperstat). Under the 2018 AstraZeneca Agreement, the Company paid AstraZeneca an upfront cash payment of $3,000 and 109,523 shares valued at $4,080 on the date of settlement and is obligated to pay milestone payments to AstraZeneca totaling up to $55,000 upon the achievement of specified regulatory and commercial milestones and up to $50,000 upon the achievement of specified sales-based milestones. In addition, the Company will pay AstraZeneca royalties in three tiers, with each tiered royalty in the range from 0-10% of net sales of specified approved products, subject to specified reductions.
In November 2021, the Company completed enrollment in a Phase 3 clinical trial of this product candidate, which is now referred to as verdiperstat, for the treatment of Amyotrophic Lateral Sclerosis ("ALS").In September 2022, the Company announced negative topline results from the Phase 3 clinical trial of verdiperstat for ALS. ALS is a progressive, life-threatening, and rare neuromuscular disease for which there are currently limited treatment options and no cure. The Company is solely responsible, and has agreed to use commercially reasonable efforts, for all development, regulatory and commercial activities related to verdiperstat. The Company may sublicense its rights under the agreement and, if it does so, will be obligated to pay a portion of any milestone payments received from the sublicense to AstraZeneca in addition
17
Index to Condensed Consolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
10.  License Agreements (Continued)
to any milestone payments it would otherwise be obligated to pay.
The 2018 AstraZeneca Agreement terminates on a country-by-country basis and product-by-product basis upon the expiration of the royalty term for such product in such country and can also be terminated if certain events occur, e.g., material breach or insolvency.
For the three and ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company did not record any material expense or make any milestone or royalty payments under the 2018 AstraZeneca Agreement.
15
Index to Condensed Combined Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
6.  License Agreements (Continued)
Fox Chase Chemical Diversity Center Inc. Agreement
In May 2019, the Company entered into an agreement with FCCDC (the "FCCDC Agreement") pursuant to which the Company purchased certain intellectual property relating to the TDP-43 protein from FCCDC. The FCCDC Agreement provides the Company with a plan and goal to identify one or more new chemical entity candidates for preclinical development for eventual clinical evaluation for the treatment of one or more TDP-43 proteinopathies. As consideration, the Company issued 100,000 of the Former Parent's common shares to FCCDC valued at $5,646.
In addition, the Company is obligated to pay FCCDC milestone payments totaling up to $4,500$3,000 with $1,000 for each additional NDA filing. The Company also issued a warrant to FCCDC, granting FCCDC the option to purchase up to 100,000 of the Former Parent’s common shares, at a strike price of $56.46 per share, subject to vesting upon achievement of certain milestones in development of TDP-43. In connection with the Separation, the warrants issued to FCCDC were vested and settled, resulting in $4,245 being recorded as research and development expense in the fourth quarter of 2022.
In connection with the FCCDC Agreement, the Company and FCCDC have established a TDP-43 Research Plan, which was amended in November 2020, that provides for certain milestones to be achieved by FCCDC, and milestone payments to be made by the Company up to approximately $3,800 over a period of up to 30 months as success fees for research activities by FCCDC. In addition to the milestone payments,under which the Company will pay FCCDC an earned royalty equal to 0% to 10% of net sales of any TD-43 patent products with a valid claim as defined in the FCCDC Agreement. The Company may also license the rights developed under the FCCDC Agreement and, if it does so, will be obligated to pay a portion of any payments received from such licensee to FCCDC in addition to any milestones it would otherwise be obligated to pay. The Company is also responsible for the prosecution and maintenance of the patents related to the TDP-43 assets.
The FCCDC Agreement terminates on a country-by-country basis and product-by-product basis upon expiration of the royalty term for such product in such country and can also be terminated if certain events occur, e.g., material breach or insolvency.
TheFor the three and six months ended June 30, 2023 and 2022, the Company did not record any material research and development expensemilestone or make any milestoneroyalty payments related to the FCCDC Agreement in the combined statements of operations and comprehensive loss during the three and nine months ended September 30, 2022 and 2021.Agreement.
UConn
In October 2018, the Company announced it had signed an exclusive, worldwide option and license agreement (the “UConn Agreement”) with the University of Connecticut (“UConn”) for the development and commercialization rights to UC1MT, a therapeutic antibody targeting extracellular metallothionein. Under the UConn Agreement, the Company had the option to acquire an exclusive, worldwide license to UC1MT and its underlying patents to develop and commercialize throughout the world in all human indications (the "UConn Option"). In September 2022, the Company exercised the UConn Option in exchange for a payment of $400. Under the UConn Agreement, UConn is entitled to milestone payments upon the achievement of specified developmental and regulatory milestones of up to $30,100 and commercial milestones of up to $50,000, and royalties of a low single-digit percentage of net sales of licensed products.
Excluding the payment made in connection with the UConn Option, forFor the three and ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company did not record any research and development expensematerial milestone or make any milestoneroyalty payments related to the UConn Agreement.
Artizan Agreement
In December 2020, the Company entered into an Option and License Agreement (the "2020 Artizan Agreement") with Artizan Biosciences Inc. ("Artizan"). Pursuant to the 2020 Artizan Agreement, the Company acquired an option (“Biohaven Option”) to obtain a royalty-based license from Artizan to manufacture, use and commercialize certain products in the United States for the treatment of diseases, including, for example, inflammatory bowel disease and other gastrointestinal inflammatory disorders, e.g., Crohn’s disease. The Biohaven Option is exercisable throughout the development phase of the products at an exercise price of approximately $4,000 to $8,000, which varies based on the market potential of the products. TheIn June 2023, the Company agreed to terminate the 2020 Artizan Agreement and Artizan have also formed a joint steering committeerelinquished its option rights under
18
Index to oversee, reviewCondensed Consolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and coordinateper share amounts)
(Unaudited)
10.  License Agreements (Continued)
certain conditions associated with the product development activities with regard to all products for which we have exercised (or will exercise in the future) the Biohaven Option.winding down of Artizan's business.
In December 2020, simultaneously with the 2020 Artizan Agreement, the Company entered into a Series A-2 Preferred Stock Purchase Agreement with Artizan. Under the agreement, the Company paid Artizan 61,494 of the Former Parent’s common shares valued at $6,000, which were issued in January 2021. In exchange,
16
Index to Condensed Combined Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
6.  License Agreements (Continued)
the Company acquired 34,472,031 shares of series A-2 preferred stock of Artizan.
In June 2021, the Company entered into a Development and License Agreement with Artizan Biosciences Inc (the "2021 Artizan Agreement"). Pursuant to the 2021 Artizan Agreement, the Company acquired an exclusive, worldwide license under Artizan’s IgA-SEQ patented technology and know-how to develop, manufacture and commercialize certain of Artizan’s compounds for use in Parkinson’s Disease. Under the 2021 Artizan Agreement, the Company is responsible for funding the development of the compounds, obtaining regulatory approvals, manufacturing the compounds and commercializing the compounds. theThe Company is also responsible for the prosecution, maintenance and enforcement of Artizan’s patents. The Company willagreed to pay Artizan development milestones of $20,000 for the first licensed compound to achieve U.S. marketing authorization and $10,000 for each subsequent U.S. approval. In addition, the Company willagreed to pay Artizan commercialization milestones totaling up to $150,000 and royalties in the low- to mid-single digits. The 2021 Artizan Agreement terminates on a country-by-country basis on the later of 10 years from the first commercial sale of licensed product in such country or the expiration of Artizan’s patents in such country and can also be terminated if certain events occur, e.g., material breach or insolvency. In June 2023, the 2021 Artizan Agreement was terminated.
In June 2022, the Company entered into an amendment (the "Amendment") to the Series A-2 Preferred Stock Purchase Agreement with Artizan. Under the Amendment, the Company made a cash payment of $4,000 in exchange for 22,975,301 shares of series A-2 preferred stock of Artizan out of a total of 45,950,601 shares of series A-2 preferred stock of Artizan for a total raise of $8,000 (the “A2 Extension Raise”). Along with the Amendment, the Company and Artizan executed a non-binding indication of interest (“Artizan Side Letter”), which describes terms under which the Company and Artizan would amend the 2020 Artizan Agreement to eliminate certain milestone payments required by us in exchange for limiting our option to the selection of the first licensed product. The
Artizan Side Letter requiresrequired Artizan to commit at least 80% of the funds raised in the A-2 Extension Raise to a certain program and to raise $35,000 of additional capital within a certain time.
As of December 31, 2022, due to concerns related to Artizan's inability to fund its future operations, the Company determined its investment in Artizan to be fully impaired. Accordingly, during the fourth quarter of 2022, the Company recognized an impairment loss of $10,000 in other income (expense) on the consolidated statements of operations.
For the three and ninesix months ended SeptemberJune 30, 20222023 and 2021, excluding the upfront payments above,2022, the Company did not record any research and development expensematerial milestone or make any milestoneroyalty payments
related to the 2020 Artizan Agreement and the 2021 Artizan Agreement.
Moda Agreement
On January 1, 2021, the Company entered into a consulting services agreement (the "Moda Agreement") with Moda Pharmaceuticals LLC ("Moda") to further the scientific advancement of technology, drug discovery platforms (including the technology licensed under the Yale MoDE Agreement), product candidates and related intellectual property owned or controlled by the Company.
Under the Moda Agreement, the Company paid Moda an upfront cash payment of $2,700 and 37,836 shares of the Former Parent valued at approximately $3,243. In addition, Moda will be eligible to receive additional development milestone payments of up to $81,612 and commercial milestone payments of up to $30,171. The Moda Agreement has a term of four years and may be terminated earlier by the Company or Moda under certain circumstances including, for example, the Company's discontinuation of research on the MoDE platform or default.
For the three and ninesix months ended SeptemberJune 30, 20222023 and 2021, excluding the upfront payments above,2022, the Company did not record any material research and development expense or make any milestone payments related to the Moda Agreement.
Reliant Agreement
In July 2021, the Company entered into a development and licensing agreement (the "Reliant Agreement") with Reliant Glycosciences LLC ("Reliant"), pursuant to which the Company and Reliant have agreed to collaborate on a program with Biohaven Labs’ multifunctional molecules to develop and commercialize conjugated antibodies for therapeutic uses relating to IgA nephropathy and treatment of other diseases and conditions. Under the Reliant Agreement, the Company paid Reliant an upfront payment in the form of issuance
19
Index to Condensed Consolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
10.  License Agreements (Continued)
of common shares of the Former Parent valued at approximately $3,686, which the Company recorded as research and development expense on its combinedcondensed consolidated statement of operations and comprehensive loss. In addition, Reliant will be eligible to receive development and regulatory milestone payments of up to $36,500, and royalties of a low single-digit percentage of net sales of licensed products.
Excluding the upfront payment discussed above, forFor the three and ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company did not record any material
17
Index to Condensed Combined Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
6.  License Agreements (Continued)
research and development expense milestone or royalty payments related to the Reliant Agreement.
KU Leuven Agreement
In January 2022, the Company and Katholieke Universiteit Leuven ("KU Leuven") entered into an Exclusive License and Research Collaboration Agreement (the "KU Leuven Agreement") to develop and commercialize TRPM3 antagonists to address the growing proportion of people worldwide living with chronic pain disorders. The TRPM3 antagonist platform was discovered at the Centre for Drug Design and Discovery and the Laboratory of Ion Channel Research at KU Leuven. Under the KU Leuven Agreement, the Company receives exclusive global rights to develop, manufacture and commercialize KU Leuven's portfolio of small-molecule TRPM3 antagonists. The portfolio includes the lead candidate, henceforth known as BHV-2100, which is being evaluated in preclinical pain models and will be the first to advance towards Phase 1 studies. The Company will support further basic and translational research at KU Leuven on the role of TRPM3 in pain and other disorders. As consideration, KU Leuven received an upfront cash payment of $3,000 and 15,340 shares of the Former Parent valued at $1,779, and is eligible to receive additional development, regulatory, and commercialization milestones payments of up to $327,750. In addition, KU Leuven will be eligible to receive mid-single digit royalties on net sales of products resulting from the collaboration.
Excluding the upfront payments discussed above, for the three and ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company did not record any material research and development expensemilestone or royalty payments related to the KU Leuven Agreement.
Taldefgrobep Alfa License Agreement
In February 2022, following the transfer of intellectual property, the Company announced that it entered into a worldwide license agreement with BMS for the development and commercialization rights to taldefgrobep alfa (also known as BMS-986089), a novel,
Phase 3-ready anti-myostatin adnectin (the "Taldefgrobep Alfa License Agreement"). Under the terms of the Taldefgrobep Alfa License Agreement, the Company will receivereceived worldwide rights to taldefgrobep alfa and BMS will be eligible for regulatory approval milestone payments of up to $200,000, as well as tiered, sales-based royalty percentages from the high teens to the low twenties. There were no upfront or contingent payments to BMS related to the Taldefgrobep Alfa License Agreement.
For the three and ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company did not record any material expense or make any milestone or royalty payments under the Taldefgrobep Alfa License Agreement.
Agreement with Hangzhou Highlightll Pharmaceutical Co. Ltd.
7.   CommitmentsIn March 2023, the Company and Contingencies
AllHangzhou Highlightll Pharmaceutical Co. Ltd. ("Highlightll") entered into an exclusive, worldwide (excluding People’s Republic of China and its territories and possessions) license agreement (the "Highlightll Agreement") pursuant to which Biohaven obtained the right to research, develop, manufacture and commercialize Highlightll’s brain penetrant dual TYK2/JAK1 inhibitor program. As partial consideration paid byfor the Former Parent in association withHighlightll Agreement, the following agreements,Company is obligated to pay Highlightll a cash payment of $10,000 and 721,136 common shares valued at approximately $10,000 as of the date the Highlightll Agreement was executed, upon the completion of certain ofpost-closing activities, which were assigned bynot completed as of June 30, 2023.
Under the Former ParentHighlightll Agreement, the Company is obligated to make milestone payments to Highlightll totaling up to $200,000 upon the achievement of specified developmental, regulatory and commercial milestones for a first indication, up to $100,000 upon the achievement of pre-specified developmental, regulatory and commercial milestones for a second indication, and up to $650,000 upon the achievement of specified sales-based milestones. Additionally, the Company has agreed to make tiered royalty payments as a percentage of net sales starting at mid single digits and peaking at low teens digits. During the royalty term, if the Company offers to include China clinical sites in its Phase 3 study sufficient for submission to Chinese National Medical Products Administration and Highlightll, at its sole discretion, agrees, then Highlightll will pay royalties in the low tens digits to the Company in connection with the Spin-Off, is recorded in the condensed combined financial statementson China sales upon approval.
The Highlightll Agreement terminates on a country-by-country basis upon expiration of the Company.
Lease Agreements
The Former Parent’s leases primarily consisted of office space that was attributed to the Company in connection with the Spin-Off. The Company determines if an arrangement is a lease at inception. The lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Real estate leases for facilities have an average remaining lease term of 4.43 years as of September 30, 2022, for which none include the optional extension. The Company has made an accounting policy election not to record short-term leases (leases with an initial term of 12 months or less) on the balance sheet. The Company currently has two short-term leases with immaterial lease expense.
Lease expense for operating lease payments is recognized on a straight-line basis over the term of the lease. Operating lease assets and liabilities are recognized based on the present value of lease payments over the lease term. Since most of the Company’s leases do not have a readily determinable implicit discount rate, the Company uses the Former Parent’s incremental borrowing rate to calculate the present value of lease payments. The Company does not separate lease components (e.g., payments for rent, real estate taxes and insurance costs) from non-lease components (e.g., common-area maintenance costs) in the event that the agreement contains both. The Company includes both the lease and non-lease components for purposes of calculating the right-of-use asset and related lease liability (if the non-lease components are fixed). The allocated operating lease cost was $159 and $379 for the three and nine months ended September 30, 2022, respectively, and $55 and $208 for the three and nine months ended September 30, 2021, respectively.
Certain of the Company’s lease agreements contain variable lease payments that are adjusted forroyalty
1820
Index to Condensed CombinedConsolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINEDCONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
7.10.  License Agreements (Continued)
term and can also be terminated if certain events occur, e.g., material breach or insolvency.
For the three and six months ended June 30, 2023 and 2022, the Company did not record any material milestone or royalty payments related to the Highlightll Agreement.
11.   Commitments and Contingencies (Continued)


Lease Agreements
actual operating expense true-ups compared with estimated amounts; however, these amounts are immaterial. The Company hadleases certain office and laboratory space. There have been no sublease incomematerial changes to the lease obligations from those disclosed in Note 12, "Commitments and there are no sale-leaseback transactions. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The following table summarizes supplemental cash flow information:
Nine Months Ended
September 30,
20222021
Right-of-use assets obtained in exchange for new operating lease liabilities$2,633 $— 
Operating cash flows paid for operating leases were immaterial forContingencies" to the nine months ended September 30, 2022 and 2021.
Supplemental balance sheet information related to leases is as follows:
In thousands, except remaining lease term and discount rateSeptember 30, 2022December 31, 2021
Assets
Other non-current assets$6,915 $5,222 
Liabilities
Other current liabilities$1,134 $439 
Other non-current liabilities4,070 2,797 
$5,204 $3,236 
Weighted average remaining lease term (in years)
4.435.75
Weighted average discount rate9.45%9.07%
The following table summarizes maturities of operating lease liabilities as of September 30, 2022:
Operating leases
2022 (remaining three months)$378 
20231,526 
20241,476 
20251,132 
20261,147 
Thereafter669 
Total lease payments6,328 
Less: imputed interest(1,124)
Total lease liabilities$5,204 
Cambridge Lease Agreement
In October 2022, the Company entered into a lease agreementconsolidated financial statements included in Cambridge, Massachusetts for approximately 27,000 square feet of lab and office space (the "Cambridge Lease"), which will be used for general office, laboratory and research and development purposes. The lease commenced on October 19, 2022, and has a term of 120 months, with an option to extend to 180 months. The following table summarizes the Company's future lease payments for the Cambridge Lease:
Amount
2022 (remaining three months)$401 
20233,403 
20243,505 
20253,610 
20263,718 
Thereafter24,393 
Total lease payments$39,030 
2022 Form 10-K.
Research Commitments
The Former ParentCompany has entered into agreements with several CROscontract manufacturing organizations ("CMOs") and contract research organizations ("CROs") to provide products and services in connection with the Company’s preclinical studies and clinical trials. Research commitments entered into by the Former Parent and related to the Company were transferred to the Company upon separation. As of SeptemberJune 30, 2022,2023, the Company had remaining maximum research commitments in excess of one year of approximately $19,750,$13,900, which are variable based on the number of trial participants, and contingent upon the achievement of certain milestones of the clinical trials covered under the agreements. If all related milestones are achieved, the Company expects these amounts to be paid over the next fivetwo years.
Indemnification Agreements
In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in
19
Index to Condensed Combined Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
7.  Commitments and Contingencies (Continued)


many cases, unlimited. The Company’s amended and restated memorandum and articles of association also provide for indemnification of directors and officers in specific circumstances. To date, the Company has not incurred any material costs as a result of such indemnification provisions. The Company does not
believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its combinedcondensed consolidated financial statements as of SeptemberJune 30, 20222023 or December 31, 2021.2022.
License Agreements
The Former ParentCompany entered into license agreements with various parties that are directly attributed to the Company under which it is obligated to make contingent and non-contingent payments (see Note 6)10). Upon the October 3, 2022 separation from the Former Parent, License agreements entered by the Former Parent and related to the Company were transferred to the Company.
Sixth Street Financing Agreement
In August 2020, the Former Parent and Biohaven Pharmaceuticals, Inc., (together with the Former Parent the "Borrowers"), entered into a financing agreement, as amended, with Sixth Street Specialty Lending, Inc., as administrative agent, and the lenders party thereto (the "Lenders") pursuant to which the Lenders agreed to extend a senior secured credit facility to the Borrowers (as amended, the “Sixth Street Financing Agreement”). The Sixth Street Financing Agreement provided for term loans in an aggregate principal amount up to $750,000, plus any capitalized interest paid in kind, and was accounted for as third-party, long-term debt by the Former Parent.
The Company was a co-obligor, jointly and severally with the Former Parent on its third-party long-term debt obligation under the Sixth Street Financing Agreement. The Former Parent’s third-party debt and related interest expense are not reflected in the combined financial statements because the Company had not agreed to pay a specified amount of the borrowings on the basis of its arrangement with the Former Parent, nor was the Company expected to pay any portion of the Former Parent’s third-party debt, and the borrowings were not specifically identifiable to the Company. On October 3, 2022, an affiliate of Pfizer, on behalf of the Former Parent, repaid in full all of the indebtedness and other obligations and liabilities owed by the Former Parent, including prepayment penalties. In connection with the termination and repayment in full
of the indebtedness and other obligations and liabilities under the Sixth Street Financing Agreement, all related liens and security interests granted by or arising under the Sixth Street Financing Agreement were automatically released and discharged.
Legal Proceedings
From time to time, in the ordinary course of business, the Company is subject to litigation and regulatory examinations as well as information gathering requests, inquiries and investigations. As of SeptemberJune 30, 2022,2023, there were no matters which would have a material impact on the Company’s financial results.
8.12. Income Taxes
The following table provides a comparative summary of the Company's income tax provision and effective income tax rate for the three and ninesix months ended SeptemberJune 30, 20222023 and 2021:2022:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
20222021202220212023202220232022
Income tax provision (benefit)$1,216 $(1,132)$14,581 $(1,091)
Income tax provisionIncome tax provision$2,177 $6,110 $3,116 $13,365 
Effective income tax rateEffective income tax rate1.8 %(2.0)%4.1 %(0.7)%Effective income tax rate2.5 %3.1 %2.0 %4.7 %
The increasedecrease in income tax expense for the ninethree and six months ended SeptemberJune 30, 20222023 as compared to 20212022 was primarily attributable to the mandatory capitalizationamortization of capitalized R&D expenses effective January 1, 2022 under the Tax Cuts and Jobs Act, offset byutilization of R&D tax credits and an increased benefit toincrease of the Company's foreign derived intangible income deduction and utilization of R&D Tax Credits. The increase in income tax expense for the three months ended September 30, 2022 as compared to 2021 was primarily attributable to the timing of income subject to taxation for the Company's profitable operations in the United States.deduction.
9.13. Related Party Transactions
The Company has not historically operated as a standalone business andRelationship with the combined financial statements are derived fromFormer Parent
Upon the consolidated financial statements and accounting recordseffectiveness of the Former Parent. The following disclosure summarizes activity between the Company andSeparation on October 3, 2022, the Former Parent includingceased to be a related party to the affiliates of the Former Parent that were not part of the Spin-Off.Company.
2021
Index to Condensed CombinedConsolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINEDCONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
9.13. Related Party Transactions (continued)
Cost Allocations
The condensed combined financial statements reflect allocations of certain expenses from the financial statements of the Former Parent, including research and development expenses and general and administrative expenses. These allocations include, but are not limited to, executive management, employee compensation and benefits, facilities and operations, information technology, business development, financial services (such as accounting, audit, and tax), legal, insurance, and share-based compensation. Some of these services will continue to be provided to the Former Parent on a temporary basis following the Distribution under a transition services agreement. See Note 2 for discussion of these costs and the methodology used to allocate them.
These allocations to the Company are reflected in the condensed combined statement of operations and comprehensive loss as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Research and development$23,048 $17,396 $84,772 $52,070 
General and administrative9,676 6,900 43,053 25,678 
Total$32,724 $24,296 $127,825 $77,748 
Management believes these cost allocations are a reasonable reflection of services provided to, or the benefit derived by, the Company during the periods presented. The allocations may not, however, be indicative of the actual expenses that would have been incurred had the Company operated as a standalone public company. Actual costs that may have been incurred if the Company had been a standalone public company would depend on a number of factors, including the chosen organizational structure, what corporate functions the Company might have performed directly or outsourced and strategic decisions the Company might have made in areas such as executive management, legal and other professional services, and certain corporate overhead functions.
Share-Based Compensation
As discussed in Note 5, Share-based compensation, Biohaven employees participated in the Former Parent’s share-based compensation plans, the costs of which have been allocated to the Company and recorded in research and development and general and administrative expenses in the condensed combined statements of operations and comprehensive loss.
Net Transfers From Former Parent
Net transfers from Former Parent represent the net effect of transactions between the Company and the Former Parent. The components of net transfers from Former Parent are as follows:
Nine Months Ended September 30,
20222021
General financing activities$187,519 $365,360 
Corporate cost allocations, excluding share-based compensation49,898 25,077 
Net transfers from Former Parent as reflected in the Combined Statement of Cash Flows237,417 390,437 
Share-based compensation77,927 52,671 
Issuance of Former Parent common shares to repurchase non-controlling interest in a subsidiary60,000 — 
Issuance of Former Parent common shares as payment for IPR&D asset acquisition58,747 — 
Issuance of Former Parent common shares as payment for business acquisition— 10,673 
Issuance of Former Parent common shares as payment for Artizan investment— 6,000 
Issuance of Former Parent common shares as payment for license and consulting agreements1,779 7,929 
Other non-cash adjustments(1,173)(1,071)
Net transfers from Former Parent as reflected in the Combined Statement of Changes in Equity$434,697 $466,639 
21
Index to Condensed Combined Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
9. Related Party Transactions (continued)
Related Party Agreements
License Agreement with Yale
On September 30, 2013, the Company entered into the Yale Agreement with Yale (see Note 6). The Company’s Chief Executive Officer is one of the inventors of the patents that the Company has licensed from Yale and, as such, is entitled to a specified share of the glutamate product-related royalty revenues that may be received by Yale under the Yale Agreement.
In January 2021, the Company entered into the Yale MoDE Agreement with Yale (see Note 6 for detail). Under the license agreement, the Company acquired exclusive, worldwide rights to Yale's intellectual property directed to its MoDE platform. As part of consideration for this license, the Company paid Yale University an upfront cash payment of $1,000 and 11,668 common shares of the Former Parent valued at approximately $1,000.
For the three and nine months ended September 30, 2022, the Company recorded $333 and $2,333, respectively, in research and development expense related to the Yale MoDE Agreement and Yale Agreement (the "Yale Agreements"). For the three and nine months ended September 30, 2021, the Company recorded $0 and $150 in research and development expense related to the the "Yale Agreements. As of September 30, 2022, the Company did not owe any amounts to Yale, which is related to the Yale MoDE SRA.
10. Subsequent Events
Separation from Biohaven Pharmaceutical Holding Company Ltd.
On October 3, 2022, the Former Parent completed the Distribution and the Spin-Off. Immediately following the Spin-Off, the Former Parent and Pfizer Inc. (“Pfizer”) consummated the transactions contemplated by the Merger Agreement. Each holder of Former Parent common shares received one common share of Biohaven for every two Former Parent common shares held of record as of the close of business, New York City time, on September 26, 2022.
In the Distribution, an aggregate of 35,832,557 common shares of the Company were issued. The aggregate number of common shares issued in connection with the Distribution did not include 2,611,392 common shares to be issued in connection with Former Parent stock options that were exercised on October 3, 2022 and 924,093 common shares to be issued in connection with Former Parent restricted stock units that vested on October 3, 2022. Pursuant to
the Distribution Agreement, immediately prior to the Distribution the Former Parent made a cash contribution to the Company which resulted in a cash balance of approximately $257,799 as of October 3, 2022
Following the Distribution, the Company owns the Business and has proprietary rights to a number of trademarks used in this prospectus which are important to our business, including the Biohaven logo. As a result of the Distribution and Spin-Off, Biohaven Ltd. is an independent, publicly traded company, effective as of October 3, 2022, and commenced regular way trading under the symbol “BHVN”’ on the New York Stock Exchange ("NYSE") on October 4, 2022.
On October 3, 2022, the Company entered into several agreements with the Former Parent in connection with the Spin-Off,Separation, including the following:
Transition Services Agreement. The Company entered into a Transition Services Agreement with the Former Parent (the “Transition Services Agreement”) under which the Company or one of its affiliates will provide the Former Parent, and the Former Parent or one of its affiliates will provide the Company, with certain transition services for a limited time to ensure an orderly transition following the Spin-Off. The services that the Company and the Former Parent agreed to provide to each other under the Transition Services Agreement include certain finance, information technology, clinical study support, human resources and compensation, facilities, financial reporting and accounting and other services. The Company will pay the Former Parent, and the Former Parent will pay the Company, for any such services received by the Former Parent or the Company, as applicable, at agreed amounts as set forth in the Transition Services Agreement.
Amounts received in connection with the Transition Services Agreement are recorded as other income on the condensed consolidated statement of operations and comprehensive loss, as they are outside of the normal operating business of the Company. For the three and six months ended June 30, 2023, the Company recorded $1,674 and $5,559 in other income reflecting transition services provided to the Former Parent. As of June 30, 2023, the Company had a receivable of $2,605 included in other current assets on the condensed consolidated balance sheet as of June 30, 2023 relating to transition services provided to the Former Parent.
United States Distribution Services Agreement. The Company entered into a United States Distribution Services Agreement with the Former Parent, (the “Distribution Agreement”), pursuant to which the Company shall continuecontinued to serve as the Former Parent’s distributor and agent for the distribution of the pharmaceutical product Nurtec ODT in the United States for a limited period of time following the Spin-Off.Spin-Off, which has concluded. Under the Distribution Services Agreement, the Former Parent and Pfizer Inc. have agreed to indemnify the Company for, among other things, losses resulting from the conduct of the distribution business or actions taken at the direction of the Former Parent.
As the Company was acting as an agent of the Former Parent for services performed under the Distribution Services Agreement, no amounts for
revenues or expenses relating to the services performed thereunder are included on the Company's condensed consolidated financial statements. As of June 30, 2023, the Company recorded restricted cash held on behalf of Former Parent of $40,415 and Due to Former Parent of $40,415 on the condensed consolidated balance sheet primarily relating to cash held in connection with the execution of the Distribution Services Agreement which is legally payable to the Former Parent.
Outsourcing & Employee Transfer Agreements. The Company entered into Outsourcing & Employee Transfer Agreements, one with Pfizer Inc., Bulldog (BVI) Ltd.,Merger Sub, the
22
Index to Condensed Combined Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
10. Subsequent Events (Continued)
Former Parent and Biohaven Pharmaceuticals, Inc. (“U.S. Employer”), and the other with Pfizer, Inc., Bulldog (BVI) Ltd.,Merger Sub, the Former Parent, and BioShin (Shanghai) Consulting Services Co., Ltd. (“Chinese Employer”), pursuant to which the Chinese Employer and the U.S. Employer will, among other things, provide Pfizer Inc. with the services of, and remain the employers of, certain of their employees for a limitedthe period of time immediately following the Spin-Off.Spin-Off through December 31, 2022. During such period, Pfizer Inc. or one of its affiliates will paypaid the U.S. Employer for employee-related expenses for its employees (including the cost of salary and wages) and will pay the Chinese Employer a service fee based on employee-related expenses for its employees (including the cost of salary and wages).
Amounts received in connection with the Outsourcing & Employee Transfer Agreements are recorded against their related operating expenses as they represent reimbursements for operating expenses incurred by the Company on behalf of the Former Parent.
Relationship with the Former Parent prior to the Separation
Pursuant to the Distribution Agreement, immediately prior to the Separation the Former Parent made a cash contribution to the Company which resulted in a cash balance of approximately $257,799 as of October 3, 2022.
Prior to the Separation, the Company did not historically operate as a standalone business and the condensed consolidated financial statements were derived from the consolidated financial statements and accounting records of the Former Parent. The following disclosure summarizes activity between the Company and the Former Parent prior to the Separation, including the affiliates of the Former Parent that were not part of the Spin-Off.
22
Index to Condensed Consolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
13. Related Party Transactions (continued)
Cost Allocations
The condensed consolidated financial statements for periods prior to the Separation reflect allocations of certain expenses from the financial statements of the Former Parent, including research and development expenses and general and administrative expenses. These allocations include, but are not limited to, executive management, employee compensation and benefits, facilities and operations, information technology, business development, financial services (such as accounting, audit, and tax), legal, insurance, and non-cash share-based compensation.
For periods prior to the Separation, these allocations to the Company are reflected in the condensed consolidated statement of operations and comprehensive loss as follows:
Three Months Ended June 30,Six Months Ended June 30,
20222022
Research and development$26,332 $61,724 
General and administrative15,587 33,377 
Total$41,919 $95,101 
Management believes these cost allocations are a reasonable reflection of services provided to, or the
benefit derived by, the Company during the period presented. The allocations may not, however, be indicative of the actual expenses that would have been incurred had the Company operated as a standalone public company. Actual costs that may have been incurred if the Company had been a standalone public company would depend on a number of factors, including the chosen organizational structure, what corporate functions the Company might have performed directly or outsourced and strategic decisions the Company might have made in areas such as executive management, legal and other professional services, and certain corporate overhead functions.
Non-Cash Share-Based Compensation
Prior to the Separation, Biohaven Ltd. Public Offeringemployees participated in the Former Parent’s non-cash share-based compensation plans, the costs of which have been allocated to the Company and recorded in research and development and general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss.
Net Transfers From Former Parent
Net transfers from Former Parent represent the net effect of transactions between the Company and the Former Parent prior to the Separation. The components of net transfers from Former Parent are as follows:
Three Months Ended June 30,Six Months Ended June 30,
20222022
General financing activities$65,732 $75,703 
Corporate cost allocations, excluding share-based compensation21,109 34,171 
Net transfers from Former Parent as reflected in the Condensed Consolidated Statement of Cash Flows86,841 109,874 
Share-based compensation20,810 60,930 
Issuance of Former Parent common shares to repurchase non-controlling interest in a subsidiary— 60,000 
Issuance of Former Parent common shares as payment for IPR&D asset acquisition58,747 58,747 
Issuance of Former Parent common shares as payment for license and consulting agreements— 1,779 
Other non-cash adjustments(1)
15,788 (704)
Net transfers from Former Parent as reflected in Note 7, "Shareholders' Equity"$182,186 $290,626 
(1) Other non-cash adjustments in the second quarter of 2022 primarily relate to a reduction in income taxes payable attributed to the Company from the Former Parent.
23
Index to Condensed Consolidated Financial Statements
BIOHAVEN LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
13. Related Party Transactions (continued)
Related Party Agreements
License Agreement with Yale University
On September 30, 2013, the Company entered into the Yale Agreement with Yale University (see Note 10). The Company’s Chief Executive Officer is one of the inventors of the patents that the Company has licensed from Yale University and, as such, is entitled to a specified share of the glutamate product-related royalty revenues that may be received by Yale University under the Yale Agreement.
In OctoberJanuary 2021, the Company entered into the Yale MoDE Agreement with Yale University (see Note 10 for details). Under the license agreement, the Company acquired exclusive, worldwide rights to Yale University's intellectual property directed to its MoDE platform. As part of consideration for this license, the Company paid Yale University an upfront cash payment of $1,000 and 11,668 common shares of the Former Parent valued at approximately $1,000. Under the Yale MoDE Agreement, the Company entered into the Yale MoDE SRA (see Note 10 for detail), which included funding of up to $4,000 over the life of the agreement. In May 2023, the Company entered into an additional sponsored research agreement with Yale University (the "2023 Yale SRA"), which includes funding of up to $612 over the life of the agreement.
For the three and six months ended June 30, 2023, the Company recorded $947 and $1,699, respectively, in research and development expense, including certain administrative expenses, related to the Yale MoDE Agreement and the Yale MoDE SRA, the Yale Agreement, and the 2023 Yale SRA (the "Yale Agreements"). For the three and six months ended June 30, 2022, the Company commenced a public offeringrecorded $488 and $2,288, respectively, in research and development expense, including certain administrative expenses, related to the Yale Agreements. As of 25,000,000 of its common shares at a price of $10.50 per share, pursuant to a registration statement on Form S-1 filed with the SEC (the "S-1"). The S-1 was declared effective by the SEC on October 20, 2022. The Company also granted the underwriters a 30-day option to purchase up to an additional 3,750,000 common shares. On October 25, 2022,June 30, 2023, the Company closed the offering, including a full exercise of the underwriters' optiondid not owe any amounts to purchase additional shares. The net proceeds raised in the offering, after deducting underwriting discounts and expenses of the offering payable by Biohaven, were approximately $282,763. The Company intends to use the net proceeds received from the offering for general corporate purposes.Yale University.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed combinedconsolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and the notes thereto included in Exhibit 99.1 to our Registration StatementAnnual Report on Form 10, which was declared effective by10-K for the year ended December 31, 2022 (the "2022 Form 10-K") filed with the Securities and Exchange Commission ("SEC"(“SEC”) on September 22, 2022.. Some of the statements contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We have based these forward-looking statements on our current expectations and projections about future events. The following information and any forward-looking statements should be considered in light of factors discussed elsewhere in this Quarterly Report on Form 10-Q and our other filings with the SEC.
Our actual results and timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, among other things, may differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Statements made herein are as of the date of the filing of this Form 10-Q with the SEC and should not be relied upon as of any subsequent date. Even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, they may not be predictive of results or developments in future periods. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.
We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made.
Overview
We are a global clinical-stage biopharmaceutical company that combinesfocused on the discovery, development and commercialization of life-changing therapies to treat a deep understandingbroad range of neuroscience, immunology, disease-related biology, advanced chemistryrare and expertise in global clinical trials to advance novel therapies for patients.common diseases. Our experienced management team brings with it a track record ofproven
track record of delivering new drug approvals for products for diseases such as migraine, depression, bipolar disorder and schizophrenia, and our research programs, built on a deep understanding of disease-related biology and neuropharmacology,schizophrenia. We are advancing novela pipeline of therapies with target indications,for diseases, many of which have limited or no treatment options, leveraging our proven drug development capabilities and proprietary platforms including Kv7 ion channel modulation for epilepsy mood disorders,and neuronal hyperexcitability, glutamate modulation for Obsessive-Compulsive Disorder (“OCD”), Spinal Muscular Atrophy (“SMA”), and Spinocerebellar Ataxia ("SCA"(“SCA”), myostatin inhibition for neuromuscular diseases and metabolic disorders, and brain-penetrant Tyrosine Kinase 2/Janus Kinase 1 (“TYK2/JAK1”) and paininhibition for neuroinflammatory disorders. Our neuroscience portfolio of early- and late-stage product candidates also includes a broad pipeline ofdiscovery research programs focused on TRPM3 channel activation for neuropathic pain, CD-38 antibody recruiting, bispecific molecules for multiple myeloma, antibody drug candidates modulating distinct nervous system targets, including Kv7 ion channelsconjugates (“Kv7”ADCs”), glutamate receptors, myostatin, and Transient Receptor Potentialtargeted extracellular protein degradation platform technology (“TRP”MoDE”) channels.with potential application in neurological disorders, cancer, and autoimmune diseases.
We are advancing our broad and diverse pipeline, with at least fiveacross early and late stage development, including three Phase 3 clinical trials currently underway or expected to start by the end of 2022.programs. We have built a highly experienced team of senior leaders and neuroscience drug developers who combine a nimble, results-driven biotech mindset with capabilities in drug discovery and development. In addition, we have several preclinical assets in our early discovery program, targeting indications in neuroscience and immunology indications.immunology.
Separation from Biohaven Pharmaceutical Holding Company Ltd.
On October 3,May 9, 2022, the Board of Directors of Biohaven Pharmaceutical Holding Company Ltd. (the “Former Parent”) approved and directed Former Parent’s management to effect the spin-off of the Kv7 ion channel activators, glutamate modulation and myostatin inhibition platforms, preclinical product candidates, and certain corporate infrastructure then owned by Former Parent (collectively, the “Biohaven Business”).
On October 3, 2022, the Former Parent completed the distribution (the “Distribution”) to holders of its common shares of all of the outstanding common shares of Biohaven Ltd. (the “Company”"Company" or “Biohaven”"Biohaven") and the spin-off of Biohaven Ltd. from the Former Parent (the “Spin-Off”) described in Biohaven’s Information Statement attached as Exhibit 99.1 to Biohaven’s Registration Statement on Form 10, as amended (Reg. No. 001-41477), which was declared effective by the SEC on September 22, 2022 (the “Form 10”).2022. Each holder of Former Parent common shares received one common share of Biohaven for every two of the Former Parent common shares held of record as of the close of business New York City time, on September 26, 2022. To implement the Spin-Off, the Former Parent transferred certain license agreements, intellectual property and the Former Parent’s corporate infrastructure, including certain non-commercial employee agreements, share-based awards
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and other corporate agreements to Biohaven. Collectively, we refer to the Distribution and Spin-Off throughout this Quarterly Report on Form 10-Q as the "Separation."
In the Distribution, an aggregate of 35,832,55735,840,459 common shares of the Company were issued. The aggregate number of common shares issued in connection with the Distribution did not include 2,611,392 common shares to be issued in connection with Former Parent stock options that were exercised on October 3, 2022 and 924,093 common shares to be issued in connection with Former Parent restricted stock units that vested on October 3, 2022.
Biohaven Ltd. is a British Virgin Islands ("BVI") corporation and was a wholly owned subsidiary of Biohaven Pharmaceutical Holding Company Ltd.the Former Parent prior to the separation.Separation.
ThePrior to the Separation, the historical combined financial statements of the Company havehad been prepared on a stand-alone basis and arewere derived from the consolidated financial statements and accounting records of Biohaven
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Pharmaceutical Holding Company Ltd.the Former Parent and are presented in conformity with U.S. GAAP.
The financial position, results of operations and cash flows of the Company historically operated as part of Biohaven Pharmaceutical Holding Company Ltd.’sthe Former Parent’s financial position, results of operations and cash flows up until the Distribution. These historical combined financial statements may not be indicative of the future performance of the Company and do not necessarily reflect what our combined results of operations, financial condition and cash flows would have been had we operated as a separate, publicly traded company during the periods presented. Our historical financial statements do not yet reflect changes in our operating structure and our capitalization as a result of the separation from Biohaven Pharmaceutical Holding Company Ltd.
Where we describe historical business activities in this Quarterly Report on Form 10-Q, we do so as if these transfers had already occurred and the Former Parent's activities related to such assets and liabilities had been performed by Biohaven Ltd.Biohaven.
Refer to Note 1, Nature"Nature of the Business and Basis of Presentation," of the Notes to the CombinedCondensed Consolidated Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q for further discussion of the underlying basis used to prepare the combinedcondensed consolidated financial statements.
Transition from the Former Parent and Costs to Operate as an Independent Company
The combinedcondensed consolidated financial statements for periods prior to the Separation reflect the operating
results and financial position of the Company as it was operated by the Former Parent prior to the Separation, rather than as an independent company. We have incurred and will continue to incur ongoing operating expenses to operate as an independent
company. These costs will include the cost of various corporate headquarters functions, information technology-related costs and costs to operate stand-alone accounting, legal and other administrative functions. We will also incur non-recurring expenses and non-recurring capital expenditures. As an independent company, our information technology operating costs may be higher than the costs allocated in the historical combined financial statements. It is not practicable to estimate the costs that would have been incurred in each of the periods presented in the historical combined financial statements for the functions described above. Actual costs that would have been incurred if we operated as a stand-alone company during these periods would have depended on various factors, including the chosen organizational structure, what corporate functions the Company might have performed directly or outsourced and strategic decisions the Company might have made in areas such as executive management, legal and other professional services, and certain corporate overhead functions. During the transition from the Former Parent, we may incur non-recurring expenses to expand our infrastructure.
TransactionsAgreements with Related Partiesthe Former Parent
We have entered into a Distribution Agreement and various agreements relating to transition services, licenses and certain other matters with the Former Parent. These agreements govern our relationship with the Former Parent and include the allocation of employee benefits, taxes and certain other liabilities and obligations attributable to periods prior to, at and after the Distribution.Separation. For additional information regarding these agreements, see Note 10, Subsequent Events,13, "Related Party Transactions," of the Notes to the CombinedCondensed Consolidated Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q.
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Clinical-Stage Milestones
Our clinical-stage milestones include the following:
Drug NameIndications1H20232H20232024
BHV-7000
Kv7 channel activator
Focal EpilepsyPhase 1 ToplineInitiate EEG StudyInitiate Phase 2/3
Drug NameBipolar disorderIndicationInitiate Phase 2/3
BHV-8000
TYK2/JAK1
1H2021Neuroinflammatory Disorders2H2021Initiate Phase 11H20222H20221H20232H2023Initiate Phase 2 - Parkinson's Disease
BHV-2100
TRPM3
Chronic pain disordersSubmit IND
Troriluzole
NCE prodrug of riluzole
SCA Type 3NDA SubmissionMAA Submission
OCDComplete Enrollment
Taldefgrobep Alfa
Anti-myostatin adnectin
SMAComplete Enrollment
BHV-1300
IgG degrader
Immune-Mediated DiseasesSubmit INDInitiate Phase 2
BHV-7000
Kv7 channel modulator
Focal epilepsy
KCNQ2-DEE
Bipolar disorder
Major depressive disorder		Initiated Phase 1
Bispecific Platform
IgA Degrader
IgA Nephropathy
Troriluzole
NCE prodrug of riluzole
Spinocerebellar ataxia ("SCA")Phase 3 Topline
Obsessive-Compulsive Disorder (“OCD”)Complete EnrollmentSubmit IND
Taldefgrobep Alfa
Anti-myostatin adnectin
Spinal Muscular Atrophy ("SMA")Start Phase 3
BHV-1100
ARM combo
Multiple MyelomaStart Phase 1
Milestone Achieved
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Kv7 Platform
BHV-7000
In April 2022, we closed the acquisition from Knopp Biosciences LLC (“Knopp”) of Channel Biosciences, LLC, a wholly owned subsidiary of Knopp owning the assets of Knopp’s Kv7 channel targeting platform, pursuant to a Membership Interest Purchase Agreement, dated February 24, 2022. The acquisition of the Kv7 channel targeting platform adds the latest advances in ion-channel modulation to our growing neuroscience portfolio. BHV-7000 (formerly known as KB-3061), the lead asset from the Kv7 platform is an activator of Kv7.2/Kv7.3, a key ion channel involved in neuronal signaling and in regulating the hyperexcitable state in epilepsy.
In June 2022, our Clinical Trial Application for BHV-7000 was approved by Health Canada, and in Julythe first quarter of 2023, we began clinical development. Our Phase 1completed a first-in-human single ascending dose ("SAD")/ multiple ascending dose ("MAD) study with BHV-7000. In the SAD and MAD cohorts, 61 subjects received BHV-7000 (N=46) or placebo (N= 15). Thirty-nine SAD subjects were randomized to BHV-7000 or placebo. Twenty-two MAD subjects were randomized to BHV-7000 or placebo for 15 days. The rates of Adverse Events ("AEs") by MedDRA System Organ Class across the pooled SAD and MAD cohorts among subjects treated with BHV-7000 and placebo are presented below in Table 1. Across the dosing groups in the SAD and MAD cohorts, there were low rates of central nervous system ("CNS")-related AEs (Table 2 below), and headache was the most common AE. No cases of somnolence were reported. The majority of the AEs were mild in severity and resolved
spontaneously. There were no deaths, serious AEs, severe AEs, or dose-limiting toxicities observed. With respect to preliminary PK results, the Company exceeded target concentrations for efficacy based on the preclinical maximal electroshock ("MES") model, which is currently underwayclinically validated and we expect resultspredictive of target concentration ranges in humans.
Table 1: Pooled SAD/MAD MedDRA System Organ Class Adverse Events
Kv71.jpg
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Table 2: CNS Adverse Events by the first half of 2023.Dose and Cohort
kv72.jpg
Epilepsy
Epilepsy is the initial disease we are targeting with activators from our Kv7 platform. Epilepsy affects approximately 3.5 million Americans, or more than 1.2% of adults and 0.6% of children in the U.S., and more than 50 million patients worldwide, according to the World Health Organization (“WHO”). It is the fourth most common neurological disorder, and many patients struggle to achieve freedom from seizures, with more than one third of patients requiring two or more medications to manage their epilepsy. While the use of anti-seizure medications is often accompanied by dose-limiting side effects, our clinical candidate BHV-7000 is specifically designed to target subtypes of Kv7 potassium channels without engagement of GABAA receptors. The lack of GABAA-R activity potentially gives BHV-7000 a wide therapeutic window which we expect to result in an improved side effect profile, limiting the somnolence and fatigue often seen in patients receiving anti-seizure medications. By adding BHV-7000 to our pipeline, we aim to bring this potassium channel modulator as a potential solution to patients with epilepsy who remain uncontrolled on their current regimens. If our Phase 1
We also initiated an electroencephalogram ("EEG") study with BHV-7000 is successfully completed, wein the first half of 2023 and expect to initiate at least one pivotal trialPhase 2/3 studies in focal epilepsy patients with epilepsy in the second half of 2023. The Phase 1 EEG study is an open-label study designed to evaluate the effects of BHV-7000 on EEG parameters in healthy adults. The study's objective is to demonstrate BHV-7000 target engagement in the cerebral cortex and to help refine dose selection for Phase 3 trials. Study measures include continuous EEG monitoring, time locked PK sampling, and changes in EEG spectral power post dose. The international 10-20 system for EEG collection will be used to capture resting data in the eyes open and closed states to be used for regional analyses of spectral power and coherence. For broadband power and absolute power for each EEG band, values from each electrode will be natural-log (ln) transformed.
In July 2023, we reported positive, interim data from the EEG biomarker study with the initial, low-dose of BHV-7000 studied in healthy volunteers. Preliminary Phase 1 data confirmed evidence of target engagement in the central nervous system for subjects with projected
therapeutic concentrations of BHV-7000 (based on the EC50 from preclinical models), measured by changes from baseline in EEG spectral power that occurred after dosing. These pharmacodynamic ("PD") effects were similar to those reported in the literature for antiseizure medicines ("ASMs"), including Kv7 activators in development that are clinically effective in treating epilepsy. BHV-7000's PD effects were also differentiated from those reported for other Kv7 activators including, specifically, the absence of increases in EEG spectral power in frequency bands associated with drowsiness and somnolence. While additional, higher-dose groups of BHV-7000 are still being evaluated in the EEG analysis, the results from the low-dose group validate the preclinical hypothesis, confirm the Phase 1 SAD/MAD clinical data, and support our plans to initiate pivotal studies with BHV-7000 in focal epilepsy and bipolar disorder in the second half of 2023. The preliminary data highlight BHV-7000's differentiation and potentially favorable clinical profile compared to other ASMs. We expect to present the complete EEG results by the end of 2023. Additionally, new PK data from multiple clinical formulations being studied has now confirmed a once daily extended-release formulation that will be used in the Phase 2/3 clinical programs.
We are evaluating and have not yet finalized potential Phase 2/3 future clinical trial designs, including trial size, and primary and secondary endpoints. We anticipate that the Phase 3 program evaluating the efficacy of BHV-7000 in adolescents and adults with refractory focal epilepsy will be randomized, double-blind, placebo-controlled, 8- and 12-week trials with primary endpoints of median percent change (US) and ≥50% responder rate (EU) and secondary endpoints of the Quality of Life in Epilepsy Inventory ("QOLIE-31") and seizure freedom.
KCNQ2 Developmental Epileptic Encephalopathy
We are currently exploring BHV-7000 as a potential treatment for KCNQ2 developmental epileptic encephalopathy ("KCNQ2-DEE"), a rare pediatric epileptic encephalopathy first described in 2012 resulting from dominant-negative mutations in the KCNQ2 gene. BHV-7000 has been granted Rare Pediatric Disease Designation by the United States Food and Drug Administration (the "FDA"(“FDA”) for the treatment of KCNQ2-DEE.
Mood Disorders
Approximately 1 in 5 adults in the US are living with neuropsychiatric illnesses that are, in turn, associated with inadequate treatment, poor quality of life, disability, and considerable direct and indirect costs. There is significant unmet need for novel and effective therapeutic options that are not limited by long latency periods to clinical effects, low response rates, and significant risks and side effects. Increasing evidence from animal models and clinical trials now suggests that Kv7.2/7.3 targeting drugs offer the potential to treat a spectrum of these neuropsychiatric
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diseases including, but not limited to, mood disorders, such as major depressive disorder, bipolar disorder and anxiety. We plan to advance BHV-7000 as a potential treatment for patients with bipolar disorder and intend to start a Phase 2/3 clinical trial targeting this indication by the end of 2023. We are evaluating and have not yet finalized potential Phase 2/3 future clinical trial designs, including trial size, and primary and secondary endpoints.
Neuropathic Pain
Neuropathic pain, as defined by the International Association for the Study of Pain, is pain caused by a lesion or disease of the somatosensory nervous system and includes a collection of heterogeneous conditions that are often chronic and debilitating and for which long term therapy is difficult. In the United States, over 30 million adults are estimated to be living with neuropathic pain.
Previous studies have demonstrated the efficacy of Kv7 targeting drugs in clinical trials for pain indications and in animal models. Selective Kv7 potassium channel activators represent a promising new approach in the development of non-opioid therapeutic options for neuropathic pain. In addition to leveraging reduced abuse and addiction risk potential of potassium channel activators, our Kv7 potassium channel platform addresses the complexities of channel subtype physiology through targeted pharmacology to overcome the limitations inherent in unbiased Kv7 activators and is intended to deliver a well-tolerated, highly effective, non-opioid treatment for neuropathic pain. During the second quarter of 2023, we initiated a sponsored research agreement with Yale to evaluate the activity of BHV-7000 in an iPSC model of inherited erythromelalgia, a severe rare genetic neuropathy.
We are currently evaluating the activity of BHV-7000 and other compounds from our proprietary series of selective Kv7.2/7.3 activators in multiple preclinical models of neuropathic pain.
BHV-7010
BHV-7010 is being developed as a next generation Kv7.2/7.3 activator with improved selectivity over Kv7.4 and differentiated ADME properties that provide flexibility for the treatment of different neurological diseases.
TYK2/JAK1
Agreement with Hangzhou Highlightll Pharmaceutical Co. Ltd.
In March 2023, we entered into an exclusive, worldwide (excluding People’s Republic of China and its territories and possessions) license agreement with Hangzhou Highlightll Pharmaceutical Co. Ltd. ("Highlightll"), pursuant to which we obtained the right to research, develop, manufacture and commercialize Highlightll’s brain penetrant dual TYK2/JAK1 inhibitor
program (the "Highlightll Agreement"). As partial consideration for the Highlightll Agreement, we are obligated to pay Highlightll a cash payment of $10.0 million and 721,136 common shares valued at approximately $10.0 million as of the agreement execution, upon the completion of certain post-closing activities, which were not completed as of June 30, 2023. See Note 10, "License Agreements," for further detail on the Highlightll Agreement.
BHV-8000
Dysregulation of the immune system has been implicated in several neurodegenerative and neuroinflammatory disorders including Parkinson's Disease, Multiple Sclerosis, Alzheimer's Disease, Amyotrophic Lateral Sclerosis and Autoimmune Encephalitis. Over-active immune cells and microglia driving chronic neuroinflammation results in release of cytokines with activation of leukocytes and is thought to contribute to neuronal injury, death, gliosis, and demyelination. The TYK2 and JAK1 signal transduction pathways mediate highly complementary immune and inflammatory signaling events. Targeted, small-molecule therapies that inhibit TYK2 or JAK kinases have separately demonstrated robust efficacy in autoimmune, dermatologic and gastrointestinal disorders. TYK2 is a validated immune target as evidenced by a recent peripheral program that gained FDA approval, and there are multiple additional peripheral non-CNS programs in clinical development. Brain penetrant inhibitors of TYK2/JAK1 have the potential to bring this validated immune target to brain disorders.
There are currently no brain penetrant, selective, dual TYK2/JAK1 inhibitors approved for brain disorders. In May 2023, we began dosing with BHV-8000 (previously TLL-041), in a Phase 1 study in normal healthy volunteers. The planned Phase 1 study is a randomized, double-blind, placebo-controlled, sequential parallel group, SAD/MAD study in healthy subjects to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics ("PD") of BHV-8000 following oral administration. In this study, single ascending dose cohorts are planned with 8 subjects in each dose cohort (6 subjects randomized to active drug and 2 subjects randomized to placebo) with up to 6 dose levels. Each dose cohort will be initiated with sentinel dosing, e.g., one active and placebo patient will be dosed simultaneously. Doses for subsequent cohorts are determined based on available PK, PD, safety and tolerability from previous cohort(s). Up to 40 subjects are planned to be evaluated with approximately 30 subjects randomized to receive active drug and approximately 10 subjects randomized to receive placebo in a double-blind fashion (8 subjects in each dose cohort, 6 subjects randomized to active drug and 2 subjects randomized to placebo.) In July 2023, we reported that we have successfully dosed three dose cohorts with single ascending doses of BHV-8000 in the ongoing Phase 1 study. Based on the preliminary data that are available, projected therapeutic concentrations
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of BHV-8000 were achieved, and BHV-8000 was well tolerated with only mild adverse events reported.
We anticipate beginning a Phase 2 clinical trial with BHV-8000 in Parkinson's disease and potentially other neuroinflammatory diseases in 2024. The Company is evaluating and has not yet finalized potential clinical trial designs, including trial size and primary and secondary endpoints for the anticipated Phase 2 clinical trial.
We acquired the worldwide rights to BHV-8000 (excluding People’s Republic of China and its territories and possessions) under an exclusive license agreement with Highlightll.
Glutamate Platform
The most advanced product candidate from our glutamate receptor antagonist platform is troriluzole (previously referred to as trigriluzole and BHV-4157), which is currently in multipletwo Phase 3 trials.trials in OCD and, for which, the Company submitted a new drug application (“NDA”) in Spinocerebellar Ataxia Type 3 (“SCA3”) to the U.S. FDA in the second quarter of 2023. Troriluzole is also being evaluated by the Global Coalition for Adaptive Research ("GCAR") as part of Glioblastoma Adaptive Global Innovative Learning Environment - NCT03970447 ("GBM AGILE"), a revolutionary patient-centered, adaptive platform trial for registration that tests multiple therapies for patients with newly-diagnosed and recurrent glioblastoma ("GBM"). Other product candidates include BHV-5500, which is an antagonist of the glutamate N-methyl-D-aspartate (“NMDA”) receptor.receptor and its oral prodrug BHV-5000.
Troriluzole
Spinocerebellar Ataxia
SCAs are a group of ultra-rare, dominantly inherited neurodegenerative disorders predominantly characterized by atrophy of the cerebellum, brainstem, and spinal cord. The disease course of SCA is one of relentless progression over years and inevitably leads to clinical deterioration of motor function, gait imbalance with frequent falling, severe speech impairment, swallowing difficulties, and premature death. SCAs are thought to be pathogenetically related but disease course and brain region involvement are known to vary between the different genotypes. SCA3, also known as Machado-Joseph disease, is the most common genotype, with a prevalence of up to 6,000 patients in North America and up to 4,600 in the European Union (“EU”) and Japan, and accounts for approximately 30% to 50% of SCAs worldwide. Currently, there are no approved symptomatic or neuroprotective treatments for SCA.
In May 2022, the Company announced top-line results from the Phase 3 clinical trial (Study BHV4157-206) evaluating the efficacy and safety of its investigational therapy,
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troriluzole, in patients with SCA. The primary endpoint, change from baseline to Weekweek 48
on the modified functional Scale for the Assessment and Rating of Ataxia (f-SARA),f-SARA, did not reach statistical significance in the overall SCA population as there was less than expected disease progression in the placebo arm over the course of the study. In the overall study population (N=213), the troriluzole and placebo groups each had mean baseline scores of 4.9 on the f-SARA and the two groups showed minimal change at the 48-week endpoint with f-SARA scores of 5.1 and 5.2, respectively (p=0.76).
PostPreliminary post hoc analysis of efficacy measures by genotype suggestssuggested a treatment effect in patients with the SCA3 genotype. A risk reduction in falls was also observed in the SCA3 population, as well as across all SCA Type 3 (“SCA3”)genotypes. Troriluzole was well tolerated with an adverse event profile similar to placebo.
In May 2023, the Company presented further analysis of Study BHV4157-206 by prespecified genotype which representsstrata that revealed consistent treatment effects of troriluzole in SCA3, the most common form of SCA and accounted forgenotype worldwide, which represented 41% of the study population.participants. In the SCA3 subgroup,subjects, troriluzole showed a numerical treatment200mg QD demonstrated benefit on the change in f-SARA score from baseline to Weekcompared with placebo at 48 compared to placebo (least squares (“LS”)weeks (LS mean changetreatment difference -0.55, nominal p-value = 0.053,-0.56; 95% CI: -1.12, 0.01)CI = -1.11, -0.01; p = 0.0450). SCA patients treated with troriluzole showed minimal disease progression overThese results were further supported by consistent results across the study period. Further, in patientsrange of secondary and exploratory endpoints assessed in the SCA3 subgroup with mild disease severity at baseline, defined as those who were able to walk without assistance at baseline (i.e., f-SARA Gait Item score = 1),subgroup.
Study BHV4157-206 is an adequate and well-controlled 48-week clinical trial that provides evidence of the efficacy of troriluzole demonstrated a greater numerical200 mg once daily in adult SCA3 subjects. Confirmatory evidence of efficacy is provided from several distinct sources, including the MAIC external control analysis of 3-year OLE data from BHV4157-206 demonstrating treatment benefit on the change in f-SARA scorescores at 1, 2 and 3 years, the MAIC external control analysis of 3-year OLE data from baseline to Week 48 compared to placebo (LS mean change difference -0.71, nominal p-value = 0.031, 95% CI: -1.36, -0.07). Notably,the Phase 2 BHV4157-201 study showing treatment benefit in the f-SARA isscores at 1, 2 and 3 years, and statistical analyses of a novel, 16-point scale developed in collaboration with FDA as the primary outcome measure for this trial; the scale was designed to limit subjectivity of the scale and focus on functional aspects of the disease so that significant changes would be considered clinically meaningful.
Across all SCA genotypes, and SCA3 specifically, patient reported falls, as measured by adverse events, reveal reductions of fall risk in the troriluzole group comparedcomposite efficacy endpoint applied to the placebo.BHV4157-206 SCA3 study population.
The risk reduction of falls in the troriluzole group combined with the progression of f-SARA scores in the untreated SCA3 group compared to SCA3 patients on troriluzole demonstrates that SCA3 patients experienced a clinically meaningful improvement in ataxia symptoms on troriluzole treatment. Given these findings and the debilitating nature of SCA, in May 2023 we announced that we submitted a New Drug Application ("NDA") to the FDA for troriluzole for the treatment of SCA3. In July 2023, the FDA informed us that it would not review the recently submitted NDA application for troriluzole given that the study's primary endpoint was not met and thus, would not permit a substantive review. The communication from the FDA indicated that we may request a Type A meeting within 30 days. Biohaven plans to request a Type A meeting to comprehensively address the FDA's concerns cited in the refusal to file letter. We intend to interact withsubmit a Marketing Authorization Application ("MAA") to the FDA and or European Medicines Agency ("EMA") in the firstsecond half of 2023. We have not yet decided on the format of such a regulatory interaction but we could seek advice through various formal or informal interactions with regulatory agencies or we could choose to submit an NDA if we believe that is warranted from the results of our ongoing post-hoc analyses. There are currently no FDA-approved medications for the treatment of SCA or any other cerebellar ataxia, and treatment is supportive. In general, multidisciplinary care provides supportive measures and the goal of this treatment is to improve quality of life and survival.
Obsessive Compulsive Disorder
We commenced a Phase 2/3 double-blind, randomized, controlled trial to assess the efficacy of troriluzole in adults with OCD in December 2017. The Phase 2/3 study results were announced in June 2020. Troriluzole 200 mg administered once daily as adjunctive therapy in OCD patients with inadequate response to standard of care treatment showed
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consistent numerical improvement over placebo on the Yale-Brown Obsessive Compulsive Scale (Y-BOCS) at all study timepoints (weeks 4 to 12) but did not meet the primary outcome measure at week 12. Troriluzole treated subjects (n = 111) had a mean Y-BOCS improvement of -3.4 points from baseline versus -2.9 for placebo-treated (n = 115) subjects [difference -0.5 and p-value = 0.451] at week 4, -5.1 points (n = 96) versus -3.6 for placebo-treated (n = 108) subjects [difference -1.5 and p-value = 0.041] at week 8, and -5.9 points (n = 99) versus -4.9 for placebo-treated (n = 102) subjects [difference -1.0 and p-value = 0.220] at week 12. Troriluzole’s safety profile was generally consistent with past clinical trial experience with its active metabolite, riluzole. Treatment emergent adverse events (“TEAE”s) were mostly reported to be mild in intensity. TEAEs that occurred in at least 5% of patients in the troriluzole group, and more frequently in the troriluzole group than in the placebo group, were headache, dizziness, fatigue, somnolence, nausea and nasopharyngitis.
Given the strong signal in the Phase 2/3 proof of concept study and after receiving feedback from the FDA in an End of Phase 2 meeting, in December 2020 we initiated enrollment in a Phase 3 program. The Phase 3 program will have an estimated total enrollment of 1,300up to 700 participants in each trial with a primary endpoint of change from baseline on the Y-BOCS total score at week 4, 8 and 10. The two Phase 3 randomized, double-blind, placebo-controlled trials that make-up our Phase 3 program for OCD are currently ongoing with enrollmentongoing. Enrollment in a Phase 3 program for OCD is expected to be completed in 2023.
Glioblastoma
In December 2021, the Global Coalition for Adaptive Research ("GCAR")GCAR selected troriluzole for evaluation in Glioblastoma Adaptive Global Innovative Learning Environment - NCT03970447 ("GBM AGILE").AGILE. GBM AGILE is a revolutionary patient-centered, adaptive platform trial for registration that tests multiple therapies for patients with newly-diagnosed and recurrent glioblastoma ("GBM"),GBM, the most fatal form of brain cancer. Troriluzole will be evaluated in all patient subgroups of the trial which include newly-diagnosed methylated MGMT, newly-diagnosed unmethylated MGMT, and recurrent GBM. Troriluzole was selected for inclusion in GBM AGILE based on compelling evidence showing deregulation of glutamate in GBM. The therapeutic potential of troriluzole in GBM and other oncology indications is supported by several recent clinical and translational research studies conducted with troriluzole and its active moiety.
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In July 2022, the Company and GCAR announced that enrollment has commenced in GBM AGILE for the evaluation of troriluzole. Enrollment in the study is ongoing.
Lanicemine (BHV-5500) and BHV-5000
We are developing BHV-5500 (lanicemine)lanicemine (BHV-5500), a low-trapping NMDA receptor antagonist.antagonist, and BHV-5000, a prodrug of lanicemine. One potential target indication is neuropathic pain, potentially including Complex
Regional Pain Syndrome (“CRPS”). CRPS is a rare, chronic pain condition typically affecting limbs and triggered by traumatic injury. Accompanying symptoms also include chronic inflammation and reduced mobility in the affected areas. Other disorders of interestpotential indications include post-herpetic neuralgia and diabetic peripheral neuropathy.neuropsychiatric diseases, potentially in combination with other agents, including Kv7 activators. We acquired worldwide rights to BHV-5500lanicemine and its oral prodrug BHV-5000 under an exclusive license agreement with AstraZeneca AB in October 2016. Current work is focused on formulation development.
Myostatin Platform
Taldefgrobep Alfa (BHV-2000)
In February 2022, we announced that we entered into a worldwide license agreement with BMS for the development and commercialization rights to taldefgrobep alfa (also known as BMS-986089 and now referred to as BHV-2000), a novel, Phase 3-ready anti-myostatin adnectin. Myostatin is a natural protein that limits skeletal muscle growth, an important process in healthy muscular development. However, indevelopment that can lead to improvements of lean mass and loss of adipose tissue. In patients with neuromuscular diseases, active myostatin can critically limit the growth needed to achieve developmental and functional milestones. Myostatin inhibition is a promising therapeutic strategy for enhancing muscle mass and strength in a range of pediatric and adult neuromuscular conditions. Taldefgrobep is a muscle-targeted treatment for neuromuscular diseaseIn addition, preclinical and offers the opportunity forearly clinical data suggest that blocking myostatin and downstream signaling through its receptors on skeletal muscle may produce physical and metabolic changes that are important to individuals living with overweight and obesity, including reducing body fat and improving insulin sensitivity while increasing lean muscle mass. Taldefgrobep’s novel mode of action and unique impact on body composition suggest it could be used as monotherapy or in combination therapy.with other anti-obesity medications.
Spinal Muscular Atrophy
In July 2022, we commenced enrollment in a Phase 3 clinical trial of BHV-2000 assessing the efficacy and safety of taldefgrobep alfa in Spinal Muscular Atrophy ("SMA"). SMA is a rare, progressively debilitating motor neuron disease in which development and growth of muscle mass are compromised, resulting in progressive weakness and muscle atrophy, reduced motor function, impaired quality of life and often death. The Phase 3 placebo-controlled, double-blind trial is designed to evaluate the efficacy and safety of taldefgrobep as an adjunctive therapy for participants who are already taking a stable dose of nusinersen or risdiplam or have a history of treatment with onasemnogene abeparvovec-xioi, compared to placebo. The study is not restricted nor limited to patients based on ambulatory status or classification of SMA. We expect to enrollrandomize approximately 180 patients in this randomized, double-blind, placebo-controlled global trial. Enrollment is expected to be completed in the second half of 2023.
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In February 2023, we received Fast Track designation from the FDA for taldefgrobep alfa for the treatment of SMA. In December 2022, we received orphan drug designation from the FDA for taldefgrobep in the treatment of SMA. In July 2023, we received orphan drug designation from the European Commission for taldefgrobep alfa in the treatment of SMA.
Metabolic Disorders
Obesity is a disease of excess and/or abnormal deposits of adipose tissue and a current global public health crisis. By 2030, it is expected that nearly one billion people will be living with obesity, including 50% of the adult and 25% of the adolescent US population. The primary driver of obesity-related morbidity and mortality is metabolically active visceral adipose tissue and associated deposits of adipose tissue in and around organs such as the heart, liver, kidneys, and muscle.
Preclinical and clinical data have demonstrated the potential for anti-myostatin therapies to produce physical and metabolic changes that are highly relevant to individuals living with overweight and obesity, including reducing total body fat and visceral adiposity, and improving insulin sensitivity and bone mineral density, while increasing lean muscle mass.
In May 2023, we announced plans to initiate a Phase 2 clinical trial of BHV-2000 for metabolic disorders. The Company is evaluating and has not yet finalized potential clinical trial designs, including timing, trial size and primary and secondary endpoints.
CD-38
BHV-1100
In the fourth quarter of 2021, we initiated a Phase 1a/1b trial in multiple myeloma patients using its antibody recruiting molecule BHV-1100 in combination with autologous cytokine induced memory-like natural killer cells and immune globulin to target and kill multiple myeloma cells expressing the cell surface protein CD38. BHV-1100 is the lead clinical asset from Biohaven’s Antibody Recruiting Molecule ("ARM™") Platform developed from a strategic alliance with PeptiDream Inc. ("PeptiDream") (TYO: 4587). This open-label single center Phase 1a/1b study will assess the safety and tolerability as well as exploratory efficacy endpoints in newly diagnosed multiple myeloma patients who have tested positive for minimal residual disease (“MRD+”) in first or second remission prior to autologous stem cell transplant (“ASCT”). We plan to enroll 30 newly diagnosed multiple myeloma patients. The primary outcome measures are dose limiting toxicities following combination product administration (time frame: 100 days post-combination product administration) and incidence and severity of side effects related to the combination product (time frame: 90 to 100 days post-combination product administration).
MPO Platform
Verdiperstat
We are developing verdiperstat (previously BHV-3241), an oral myeloperoxidase inhibitor for the treatment of neurodegenerative diseases. One potential target indication is Amyotrophic Lateral Sclerosis ("ALS"). In September 2019, we announced that verdiperstat was selected to be studied in the Phase 3 HEALEY ALS Platform Trial, which is being conducted by the Sean M. Healey & AMG Center for ALS at Massachusetts General Hospital in collaboration with the Northeast ALS Consortium clinical trial network. Promising investigational drugs were chosen for the HEALEY ALS Platform Trial through a competitive process, with the Healey Center providing partial financial support to successful applicants. The Phase 3 HEALEY ALS Platform Trial of verdiperstat began enrollment in July 2020. Enrollment in the trial was completed in November 2021.
In September 2022, the Company announced that verdiperstat did not statistically differentiate from placebo on the prespecified primary efficacy outcome, disease progression measured by the ALS Functional Rating Scale-Revised and survival, nor the key secondary efficacy measures during the 24-week study period. Initial analysis of safety data was consistent with the overall profile of verdiperstat from prior clinical trial experience. Additional analyses are ongoing, and complete study results will be presented at an upcoming scientific meeting. At this time, we do not have plans to pursue any additional clinical trials evaluating
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verdiperstat in ALS and we are evaluating its potential in other disease indications.
Verdiperstat was progressed through Phase 2 clinical trials by AstraZeneca. Seven clinical studies have been completed by AstraZeneca, including four Phase 1 studies in healthy subjects, two Phase 2a studies in subjects with Parkinson’s disease, and one Phase 2b study in subjects with MSA. We have entered into an exclusive license agreement with AstraZeneca for the product candidate.
Early
Discovery ProgramsResearch
Kleo Pharmaceuticals, Inc. and Biohaven Labs
In January 2021, we acquired the remaining approximately 58% of Kleo Pharmaceuticals, Inc. ("Kleo") that we did not previously own. We have assumed Kleo's laboratory facilities located in Science Park in New Haven, Connecticut. We are continuing several existing Kleo discovery partnerships, including one with the Bill and Melinda Gates Foundation for the development of a Hyperimmune Globulin Mimic for COVID-19 and one with PeptiDream for the development of immuno-oncology therapeutics (See Note 4).
Biohaven's proprietary Multimodal Antibody Therapy Enhancer ("MATE") conjugation technology uses a new class of synthetic peptide binders to target the spike protein of SARS-CoV-2 that are then selectively conjugated to commercially available intravenous immunoglobulin. The Biohaven synthetic binders for SARS-CoV2 were designed to establish a much wider area and number of contacts with the spike protein that other agents like monoclonal antibodies. In February 2021, we announced that BHV-1200, developed with Biohaven's proprietary MATE platform, has demonstrated functional binding and neutralization of the SARS-CoV-2 virus, including the strains known as the "English" and "South African" variants (also known as B.1.1.7 and B.1.351, respectively). The preliminary experiments conducted by Biohaven Labs and an academic collaborator demonstrated that BHV-1200 substantially reduced viral entry into cells. Accelerated development of the COVID-19 MATE program has been supported by the Bill and Melinda Gates Foundation. In addition, the in vitro data indicated that BHV-1200 may activate important immune system components including antibody-dependent cellular phagocytosis and antibody dependent cellular cytotoxicity. We believe our proprietary MATE-conjugation technology could also be used against other infectious diseases by changing the targeting moiety of its antibody binders.therapeutics.
TDP-43
Agreement with Fox Chase Chemical Diversity Center, Inc.
In May 2019, we entered into an agreement with Fox Chase Chemical Diversity Center Inc. (“FCCDC”) for FCCDC’s TDP-43 assets (the “FCCDC Agreement”). The FCCDC Agreement provides us with a plan and goal to
identify one or more new chemical entity candidates for preclinical development for eventual clinical evaluation for the treatment of one or more TDP-43 proteinopathies. In connection with the FCCDC Agreement, Biohaven and FCCDC have established a TDP-43 Research Plan that provides for certain milestones to be achieved by FCCDC, and milestone payments to be made by us.
UC1MT
Agreement with University of Connecticut
In October 2018, we entered into an exclusive, worldwide option and license agreement (the "UConn Agreement") with the University of Connecticut ("UConn") for the development and commercialization rights to UC1MT, a therapeutic antibody targeting extracellular metallothionein. Under this agreement, we had the option to acquire an exclusive, worldwide license to UC1MT and its underlying patents to develop and commercialize throughout the world in all human indications (the "UConn Option"). In September 2022, the Company exercised the UConn Option in exchange for a payment of $0.4 million. Under the agreement, UConn will be entitled to milestone payments upon the achievement of specified regulatory and commercial milestones, and royalties of a low single-digit percentage of net sales of licensed products.
Artizan Biosciences, Inc.
In December 2020, we entered into an Option and License Agreement (the "2020 Artizan Agreement") with Artizan Biosciences Inc. ("Artizan"), a biotechnology company focused on addressing inflammatory diseases involving the human intestinal microbiota. Pursuant to the 2020 Artizan Agreement, we acquired an option to obtain a royalty-based license from Artizan to manufacture, use and commercialize certain products. Artizan will use the proceeds to continue advancing the preclinical research and development of its lead
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program for inflammatory bowel disease which is anticipated to enter the clinic in early 2023, as well as to explore additional disease targets. In November 2021, we announced a collaborative therapeutic discovery and development program in Parkinson’s disease ("PD"), to exploit recent scientific advances in the understanding of pathogenic roles played by the gut microbiome in PD. In June 2022, we and Artizan executed a non-binding indication of interest which describesdescribed terms under which we and Artizan would amend the 2020 Artizan Agreement to eliminate certain milestone payments required by us in exchange for limiting our option to the selection of the first licensed product. In the fourth quarter of 2022, Artizan was unable to secure additional financing to support its ongoing operations, and, as a result, began reviewing strategic options for the sale of its assets, and secured a small bridge financing to fund operations during the strategic review.
During the fourth quarter of 2022, due to concerns related to Artizan's inability to fund its future operations, we determined our investment in Artizan to be fully impaired. In January 2023, Artizan severed all of its discovery employees and halted the Parkinson's Disease ("PD") program. Artizan plans to initiate the process of seeking a strategic partner to take over Artizan or its assets. In June 2023, we agreed to terminate the 2020 Artizan Agreement and relinquish our option rights under certain conditions associated with the winding down of Artizan’s business.
Reliant Glycosciences, LLC
In July 2021, we entered into a development and license agreement with Reliant Glycosciences, LLC ("Reliant") for collaboration on a program with Biohaven Labs’ multifunctional molecules to develop and commercialize conjugated antibodies for therapeutic
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uses relating to IgA nephropathy and treatment of other diseases and conditions. Under the Agreement, Reliant was entitled to an upfront share payment and will be eligible to receive development milestone payments and royalties of net sales of licensed products.
TRPM3 Antagonists
In January 2022, we entered into an Exclusive License and Research Collaboration Agreement with Katholieke Universiteit Leuven ("KU Leuven") to develop and commercialize TRPM3 antagonists to address the growing proportion of people worldwide living with chronic pain disorders (the "KU Leuven Agreement"). The TRPM3 antagonist platform was discovered at the Centre for Drug Design and Discovery and the Laboratory of Ion Channel Research at KU Leuven. Under the KU Leuven Agreement,we receive exclusive global rights to develop, manufacture and commercialize KU Leuven's portfolio of small-molecule TRPM3 antagonists. The portfolio includes the lead candidate, henceforth known as BHV-2100, which is being evaluated in preclinical pain models and will be the first to advance towards Phase 1 studies. We expect to submit an IND application for BHV-2100 with the FDA in the second half of 2023. We will support further basic and translational research at KU Leuven on the role of TRPM3 in pain and other disorders. The Company is evaluating and has not yet finalized potential clinical trial
designs, including size and primary and secondary endpoints.
MoDE Platform
In January 2021, we entered into a worldwide, exclusive license agreement with Yale University for the development and commercialization of a novel Molecular Degrader of Extracellular Protein ("MoDE") platform (the "Yale MoDE Agreement"). Under the license agreement, we acquired exclusive, worldwide rights to Yale University's intellectual property directed to its MoDE platform. The platform pertains to the clearance of disease-causing protein and other biomolecules by targeting them for lysosomal degradation using multi-functional molecules.
In October 2022, we announced advancements in the development of our MoDE extracellular target degrader platform technology licensed from Yale University for various disease indications, including, but not limited to, neurological disorders, cancer, infectious and autoimmune diseases. Biohaven made further innovations in this ground-breaking technology with new patent applications covering additional targets and functionality.
We evaluated the effect of single and multiple doses of our immunoglobulin gamma ("IgG") bispecific degrader, BHV-1300, in cynomolgus monkeys. In confirmatory studies, we reported 50% IgG lowering from baseline after one day, and 75% reduction of IgG levels after two days; the data in this pre-clinical study compares favorably to the standard of care therapy, efgartigimod, an FcRn inhibitor where reduction of IgG levels in cynomolgus reached approximately 50% in 5-7 days. The Company expects to submit an IND application for BHV-1300 with the FDA in the second half of 2023 and expects to initiate Phase 2 studies in 2024. The Company is evaluating and has not yet finalized potential clinical trial designs, including size and primary and secondary endpoints.
The Company presented preclinical data with a second MoDE targeting galactose deficient IgA ("Gd-IgA"), which is believed to play a pathogenic role in IgA Nephropathy. Specific removal of pathogenic Gd-IgA with preservation of normal IgA potentially permits disease remission without incurring an infection risk. The Company shared preliminary data demonstrating the chimeric antibody-ASGPR ligand conjugate specifically mediated endocytosis of Gd-IgA, as opposed to normal IgA, in an endocytosis assay with HepG2 cells. The Company expects to submit an IND application with the FDA in the first half of 2024.
Components of Our Results of Operations
Revenue
To date, the we have not generated any revenue from product sales and we do not expect to generate any revenue from the sale of products in the near future. If our development efforts for our product candidates are
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successful and result in regulatory approval or additional license agreements with third parties, then
we may generate revenue in the future from product sales.
Operating Expenses
Research and Development Expenses
Research and development ("R&D") expenses consist primarily of costs incurred in connection with the development of our product candidates. We expense research and development costs as incurred. These expenses include:
•expenses incurred under agreements with contract research organizations (“CROs”)CROs or contract manufacturing organizations (“CMOs”), as well as investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services;
•manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical and clinical trial materials and commercial materials, including manufacturing validation batches;
•employee-related expenses, including salaries, benefits, travel and non-cash share-based compensation expense for employees engaged in research and development functions;
•costs related to compliance with regulatory requirements;
•development milestone payments incurred prior to regulatory approval of the product candidate;
•rent and operating expenses incurred for leased lab facilities and equipment; and
��•payments made in cash, equity securities or other forms of consideration under third-party licensing or other agreements prior to regulatory approval of the product candidate.
We recognize external development costs based on an evaluation of the progress to completion of specific tasks using estimates of our clinical personnel or information provided to us by our service providers.
Our external direct research and development expenses are tracked on a program-by-program basis for our product candidates and consist primarily of external costs, such as fees paid to outside consultants, CROs, CMOs, and central laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. Our direct research and development expenses by program also include fees and certain development milestones incurred under license agreements. We do not allocate employee costs, or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources primarily to oversee the research and development as well as for
managing our preclinical development, process development, manufacturing and clinical development activities. Many employees work across multiple
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programs, and we do not track personnel costs by program.
Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. As a result, weWe expect that our research and development expenses will remain significant over the next several years as we increase personnel costs, conduct late-stage clinical trials, and prepare regulatory filings for our product candidates. We also expect to incur additional expenses related to milestone and royalty payments payable to third parties with whom we have entered into license agreements to acquire the rights to our product candidates.
The successful development and commercialization of our product candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates or when, if ever, material net cash inflows may commence from any of our product candidates. This uncertainty is due to the numerous risks and uncertainties associated with product development and commercialization, including the uncertainty of:
•the scope, progress, outcome and costs of our preclinical development activities, clinical trials and other research and development activities;
•establishment of an appropriate safety profile with IND-enabling studies;
•successful patient enrollment in, and the initiation and completion of, clinical trials;
•the timing, receipt and terms of any marketing approvals from applicable regulatory authorities;
•establishment of commercial manufacturing capabilities or making arrangements with third-party manufacturers;
•development and timely delivery of commercial-grade drug formulations that can be used in our clinical trials and for commercial launch;
•acquisition, maintenance, defense and enforcement of patent claims and other intellectual property rights;
•significant and changing government regulation;
•initiation of commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others; and
•maintenance of a continued acceptable safety profile of the product candidates following approval.
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General and Administrative Expenses
General and administrative expenses consist primarily of personnel costs, including salaries, benefits and travel expenses for our executive, finance, business, corporate development and other administrative functions; and non-cash share-based compensation expense. General and administrative expenses also include facilities and other related expenses, including rent, depreciation, maintenance of facilities, insurance and supplies; and for public relations, audit, tax and legal services, including legal expenses to pursue patent protection of our intellectual property.
We anticipate that our general and administrative expenses, including payroll and related expenses, will remain significant in the future as we continue to support our research and development activities and prepare for potential commercialization of our product candidates, if successfully developed and approved. We also anticipate increased expenses associated with general operations, including costs related to accounting and legal services, director and officer insurance premiums, facilities and other corporate infrastructure, office-related costs, such as information technology costs, and certain costs to establish ourself as a standalone public company, as well as ongoing additional costs associated with operating as an independent, publicly traded company.
Other Income (Expense)
Gain (Loss) from Equity Method Investment
Prior to our acquisition of Kleo in January 2021, we owned approximately 41.9% of the outstanding shares as of December 31, 2020, and accounted for our investment in Kleo under the equity method of accounting. As a result, our proportionate share of Kleo’s net income or loss each reporting period was included in other income (expense), net, in our condensed combined statements of operations and comprehensive loss and results in a corresponding adjustment to the carrying value of the equity method investment on our condensed combined balance sheet.
On January 4, 2021, we acquired the rest of the shares of Kleo, and post-transaction we own 100% of the outstanding shares of Kleo.
Other Income, Net
Other income, net primarily consists of a gain recognized uponnet investment income and service revenue from the Company’s determination thatTransition Service Agreement we entered into with the valueFormer Parent. Net investment income is comprised of interest income and net accretion and amortization on investments. Refer to Note 13, "Related Party Transactions," for further discussion of agreements entered into with the contingent value right related to our Kleo acquisition was immaterial as of December 31, 2021. The consideration transferred for the Kleo acquisition included contingent consideration in the form of a contingent value right to receive one dollar in cash for each Kleo share if certain specified Kleo biopharmaceutical products or product candidates receive the approval of the FDA prior to the expiration of 30 months following the effective time of the transaction. The maximum amount payable pursuant to
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the contingent value right was approximately $17.3 million. At December 31, 2021, the Company determined the value of the contingent value right to be immaterial and recognized a gain of $1.5 million related to the contingent value right in other income, net.Former Parent.
Provision for Income Taxes
The income tax amountsexpense in the condensed combinedconsolidated financial statements have beenwas calculated on a
separate return method and are presented as if the Company’s operations were separate taxpayers in the respective jurisdiction. Therefore, tax expense, cashjurisdictions up to and including the Separation. Cash tax payments, and items of currentincome taxes receivable and deferred taxes, may not benet of valuation allowance, are reflective of our actual tax balances prior to orand subsequent to the Distribution.Separation.
As a company incorporated in the BVI, we are principally subject to taxation in the BVI. Under the current laws of the BVI, the Company and all dividends, interest, rents, royalties, compensation and other amounts paid by the Company to persons who are not resident in the BVI and any capital gains realized with respect to any shares, debt obligations, or other securities of the Company by persons who are not resident in the BVI are exempt from all provisions of the Income Tax Ordinance in the BVI.
We have historically outsourced all of the research and clinical development for itsour programs under a master services agreement with Biohaven Pharmaceuticals, Inc. ("BPI"). As a result of providing services under this agreement, BPI was profitable
during the ninethree and six months ended SeptemberJune 30, 20222023 and 2021,2022, and BPI is subject to taxation in the United States. As such, in each reporting period, the tax provision includes the effects of combining the results of operations of BPI.
At SeptemberJune 30, 20222023 and December 31, 2021,2022, we continued to maintain a full valuation allowance against our net deferred tax assets, which are comprised primarily of capitalized research and development deductions, research and development tax credit carryforwards, and future stock based compensation deductionsnet operating loss carryforwards, based on management’s assessment that it is more likely than not that the deferred tax assets will not be realized. We recorded an income tax provision during the three and ninesix months ended SeptemberJune 30, 20222023 of $1.2$2.2 million and $14.6$3.1 million, respectively, and a benefitprovision of $1.1$6.1 million and $1.1$13.4 million during the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively, which primarily represents U.S. Federal tax and state taxes related to BPI’s profitable operations in the United States.
In January 2021, we completed the acquisition
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Contents
Results of Operations
Comparison of the Three Months Ended SeptemberJune 30, 20222023 and 20212022
The following tables summarize our results of operations for the three months ended SeptemberJune 30, 2023 and 2022:
Three Months Ended June 30,
 20232022Change
 In thousands
Operating expenses: 
Research and development$79,490 $177,087 $(97,597)
General and administrative14,521 20,023 (5,502)
Total operating expenses94,011 197,110 (103,099)
Loss from operations(94,011)(197,110)103,099 
Other income (expense): 
Other income (expense), net5,842 (67)5,909 
Total other income (expense), net5,842 (67)5,909 
Loss before provision for income taxes(88,169)(197,177)109,008 
Provision for income taxes2,177 6,110 (3,933)
Net loss$(90,346)$(203,287)$112,941 
Research and Development Expenses
Three Months Ended June 30,
 20232022Change
In thousands
Direct research and development expenses by program:   
BHV-7000 & BHV-7010$9,904 $119,249 $(109,345)
BHV-80001,115 — 1,115 
BHV-2100 (TRPM3)1,311 632 679 
Troriluzole19,141 13,125 6,016 
BHV-200011,078 4,116 6,962 
BHV-1100487 252 235 
BHV-1200 (COVID-19)— 2,655 (2,655)
Verdiperstat2,454 3,935 (1,481)
Other programs234 88 146 
Unallocated research and development costs:
Personnel related (including non-cash share-based compensation)19,280 22,853 (3,573)
Preclinical research programs10,734 6,532 4,202 
Other3,752 3,650 102 
Total research and development expenses$79,490 $177,087 $(97,597)
R&D expenses, including non-cash share-based compensation costs, were $79.5 million for the three months ended June 30, 2023, compared to $177.1 million for the three months ended June 30, 2022. The decrease of $97.6 million was primarily due to a one-time $93.7 million expense during the three months ended June 30, 2022 for our Kv7 Platform Acquisition and 2021:a $25.0 million milestone relating to BHV-7000. The decrease was partially offset by increases in direct program spend for additional and advancing clinical trials in 2023, as compared to the same period in the prior year.
Three Months Ended September 30,
 20222021Change
 In thousands
Operating expenses: 
Research and development$52,845 $46,973 $5,872 
General and administrative14,792 8,519 6,273 
Total operating expenses67,637 55,492 12,145 
Loss from operations(67,637)(55,492)(12,145)
Other income (expense): 
Other income (expense), net— (5)5 
Total other (expense) income, net— (5)5 
Loss before provision (benefit) for income taxes(67,637)(55,497)(12,140)
Provision (benefit) for income taxes1,216 (1,132)2,348 
Net loss and comprehensive loss$(68,853)$(54,365)$(14,488)
Non-cash share-based compensation expense was $2.5 million for the three months ended June 30, 2023, a decrease of $10.3 million as compared to the same period in 2022. Non-cash share-based compensation expense was higher in the second quarter of 2022 primarily because expense allocated from the Former Parent equity plan, prior to the spin-off, was based on equity awards with higher grant date fair values, which was partially offset by increased personnel costs related to an increase in headcount for our discovery operations.
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General and Administrative Expenses
General and administrative expenses were $14.5 million for the three months ended June 30, 2023, compared to $20.0 million for the three months ended June 30, 2022. The decrease of $5.5 million was primarily due to decreased non-cash share-based compensation costs. Non-cash share-based compensation expense was $2.2 million for the three months ended June 30, 2023, a decrease of $5.8 million as compared to the same period in 2022. Non-cash share-based compensation expense was higher in the second quarter of 2022 primarily because expense allocated from the Former Parent equity plan, prior to the spin-off, was based on equity awards with higher grant date fair values.
Other Income (Expense), Net
Other income (expense), net was a net income of $5.8 million for the three months ended June 30, 2023,
compared to net expense of $67 thousand for the three months ended June 30, 2022. The increase of $5.9 million in income was primarily due to an increase in net investment income of $4.1 million and an increase of $1.7 million in other income reflecting transition services provided to the Former Parent during the three months ended June 30, 2023.
Provision for Income Taxes
We recorded an income tax provision of $2.2 million for the three months ended June 30, 2023, compared to a provision for income taxes of $6.1 million for the three months ended June 30, 2022. The decrease in income tax expense was primarily attributable to the amortization of prior year capitalized R&D expenses, the utilization of R&D tax credits, and an increase in the Company's foreign derived intangible income deduction.
Comparison of the Six Months Ended June 30, 2023 and 2022
The following tables summarize our results of operations for the six months ended June 30, 2023 and 2022:
Six Months Ended June 30,
20232022Change
In thousands
Operating expenses:
Research and development$142,951 $247,183 $(104,232)
General and administrative28,842 39,700 (10,858)
Total operating expenses171,793 286,883 (115,090)
Loss from operations(171,793)(286,883)115,090 
Other income (expense):
Other (expense) income14,071 (71)14,142 
Total other (expense) income, net14,071 (71)14,142 
Loss before provision (benefit) for income taxes(157,722)(286,954)129,232 
Provision (benefit) for income taxes3,116 13,365 (10,249)
Net loss and comprehensive loss$(160,838)$(300,319)$139,481 

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Research and Development Expenses
Three Months Ended September 30,Six Months Ended June 30,
20222021Change20232022Change
In thousandsIn thousandsIn thousands
Direct research and development expenses by program:Direct research and development expenses by program:   Direct research and development expenses by program:
BHV-7000$4,056 $— $4,056 
BHV-7000 & BHV-7010BHV-7000 & BHV-7010$17,773 $119,438 $(101,665)
BHV-8000BHV-80001,161 $— 1,161 
BHV- 2100 (TRPM3)BHV- 2100 (TRPM3)2,026 $6,509 (4,483)
TroriluzoleTroriluzole15,272 9,947 5,325 Troriluzole37,543 $26,642 10,901 
BHV-2000BHV-200017,933 6,996 10,937 
BHV-1100BHV-11001,144 499 645 
BHV-1200 (COVID 19)BHV-1200 (COVID 19)— 4,973 (4,973)
VerdiperstatVerdiperstat2,686 11,955 (9,269)Verdiperstat2,199 8,121 (5,922)
BHV-1100128 280 (152)
BHV-1200 (COVID-19)259 1,113 (854)
BHV-20002,898 — 2,898 
Other programsOther programs482 199 283  Other programs437 193 244 
Unallocated research and development costs:Unallocated research and development costs:Unallocated research and development costs:
Personnel related (including non-cash share-based compensation)Personnel related (including non-cash share-based compensation)21,441 15,675 5,766 Personnel related (including non-cash share-based compensation)36,959 55,240 (18,281)
Preclinical research programsPreclinical research programs3,857 5,915 (2,058)Preclinical research programs18,278 11,737 6,541 
OtherOther1,766 1,889 (123)Other7,498 6,835 663 
Total research and development expensesTotal research and development expenses$52,845 $46,973 $5,872 Total research and development expenses$142,951 $247,183 $(104,232)
R&D expenses, including non-cash share-based compensation costs, were $52.8$143.0 million for the threesix months ended SeptemberJune 30, 2022,2023, compared to $47.0$247.2 million for the threesix months ended SeptemberJune 30, 2021.2022. The increasedecrease of $5.9$104.2 million was primarily due to an increasea one-time $93.7 million expense during the six months ended June 30, 2022 for our Kv7 Platform Acquisition, a $25.0 million milestone relating to BHV-7000, and a decrease of $4.1$18.3 million in expense for BHV-7000, an increase in expense for BHV-2000 of $2.9 million, an increase in expense for troriluzole of $5.3 million and an increase of $5.8 million in personnel-relatedpersonnel related costs. These increases wereThe decrease was partially offset by decreasesincreases in direct program expensespend for verdiperstat of $9.3 millionadditional and preclinical research programs of $2.1 million.advancing clinical trials in 2023, as compared to the same period in the prior year. Non-cash share-based compensation expense was $9.7$4.7 million for the threesix months ended SeptemberJune 30, 2022,2023, a decrease of $0.5$32.6 million as compared to the same period in 2021.
General and Administrative Expenses
General and administrative expenses were $14.8 million for the three months ended September 30, 2022, compared to $8.5 million for the three months ended
September 30, 2021. The increase of $6.3 million was primarily due to increased expenses related to accounting, legal and other professional fees associated with Pfizer's acquisition of the Former Parent and the Spin-Off.2022. Non-cash share-based compensation expense was $7.3 million forhigher in the three months ended September 30, 2022, an increase of $2.1 million as compared to the same period in 2021.
Provision (Benefit) for Income Taxes
We recorded an income tax provision of $1.2 million for the three months ended September 30, 2022, compared to a benefit for income taxes of $1.1 million for the three months ended September 30, 2021. The increase in income tax expense was primarily attributable to the mandatory capitalization of R&D expenses effective January 1, 2022 under the Tax Cuts and Jobs Act, offset by an increased benefit to the Company's foreign derived intangible income deduction and the utilization of Research Tax Credits.
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Comparison of the Nine Months Ended September 30, 2022 and 2021
The following tables summarize our results of operations for the nine months ended September 30, 2022 and 2021:
Nine Months Ended September 30,
20222021Change
In thousands
Operating expenses:
Research and development$300,028 $139,668 $160,360 
General and administrative54,492 28,349 26,143 
Total operating expenses354,520 168,017 186,503 
Loss from operations(354,520)(168,017)(186,503)
Other income (expense):
Gain from equity method investment— 5,261 (5,261)
Other (expense) income(71)(245)174 
Total other (expense) income, net(71)5,016 (5,087)
Loss before provision (benefit) for income taxes(354,591)(163,001)(191,590)
Provision (benefit) for income taxes14,581 (1,091)15,672 
Net loss and comprehensive loss$(369,172)$(161,910)$(207,262)

Research and Development Expenses
Nine Months Ended September 30,
20222021Change
In thousands
Direct research and development expenses by program:
BHV-7000$123,760 $— $123,760 
Troriluzole41,914 $39,630 2,284 
Verdiperstat10,807 25,437 (14,630)
BHV-1100627 1,050 (423)
BHV-1200 (COVID 19)5,233 1,715 3,518 
BHV-20009,895 — 9,895 
   Other programs695 54 641 
Unallocated research and development costs:
Personnel related (including non-cash share-based compensation)76,682 48,139 28,543 
Preclinical research programs21,815 18,820 2,995 
Other8,600 4,823 3,777 
Total research and development expenses$300,028 $139,668 $160,360 
R&D expenses, including non-cash share-based compensation costs, were $300.0 million for the nine months ended September 30, 2022, compared to $139.7 million for the nine months ended September 30, 2021. The increase of $160.4 million was primarily due to an increase of $123.8 million in expense for BHV-7000 and an increase of $28.5 million in personnel costs related to increases in headcount. The $123.8 million increase in expense for BHV-7000 was primarily due to the Kv7 Platform Acquisition, which resulted in $93.7 million of expense recorded to R&D during the threesix months ended June 30, 2022, and a $25.0 million milestoneprimarily because expense recognized duringallocated from the second quarter of 2022Former Parent equity plan, prior to the spin-off, was based on equity awards with higher grant date fair values, which became payable in June 2022. These increases
werewas partially offset by a decrease in program expense for verdiperstat of $14.6 million. Non-cash share-based compensation expense was $$47.0 million for the nine months ended September 30, 2022,increased personnel costs related to an increase of $14.9 million as compared to the same period in 2021.headcount for our discovery operations.
General and Administrative Expenses
G&A expenses, including non-cash share-based compensation costs, were $54.5$28.8 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $28.3$39.7 million for the ninesix months ended SeptemberJune 30, 2021.2022. The increasedecrease of $26.1$10.9 million was primarily due to increases in personnel-related costs, includingdecreased non-cash share-based compensation expense, andcosts. This was partially offset by increased expenses
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relatedpersonnel costs in the six months ended June 30, 2023 compared to accounting, legal and other professional fees associated with the Pfizer acquisitionsame period in 2022, due to a majority of the personnel costs in the six months ended June 30, 2022 being allocated to the Former Parent and spin-off of Biohaven Ltd. as an independent, publicly traded company.Parent. Non-cash share-based compensation
expense was $31.0$3.8 million for the ninesix months ended SeptemberJune 30, 2022, an increase2023, a decrease of $10.4$19.9 million as compared to the same period in 2021.2022. Non-cash share-based compensation expense was higher in the six months ended June 30, 2022, primarily because expense allocated from the Former Parent equity plan, prior to the spin-off, was based on equity awards with higher grant date fair values.
Other Income (Expense) Income,, Net
Other expense,income (expense), net was a net expenseincome of $0.1$14.1 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to other incomea net expense of $5.0 million$71 thousand for the ninesix months ended SeptemberJune 30, 2021.2022. The decreaseincrease of $5.1$14.1 million in net income was primarily due to net investment income of $8.2 million and service revenue from the acquisitionTransition Service Agreement we entered into with the Former Parent of Kleo in January 2021, which resulted in a gain of $5.3 million being recognized during the nine months ended September 30, 2021 upon our remeasurement to fair value of the existing equity interest in Kleo.$5.6 million.
Provision (Benefit) for Income Taxes
We recorded a provision for income taxes of $14.6$3.1 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to a benefitan expense for income taxes of $1.1$13.4 million for the ninesix months ended SeptemberJune 30, 2021.2022. The increasedecrease in income tax expense was primarily attributable to the mandatory capitalizationamortization of prior year capitalized R&D expenses, the utilization of R&D expenses effective January 1, 2022 under the Tax Cutstax credits, and Jobs Act, offset by an increased benefit toincrease in the Company's foreign derived intangible income deduction and the utilization of research tax credits.deduction.
Liquidity and Capital Resources
Since our inception as a business of the Former Parent, we have not generated any revenue and have incurred significant operating losses and negative cash flows from operations. We will not generate revenue
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from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. We expect to continue to incur significant expenses for at least the next several years as we advance our product candidates from discovery through preclinical
development and clinical trials and seek regulatory approval and pursue commercialization of any approved product candidate. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. In addition, we may incur expenses in connection with the in-license or acquisition of additional product candidates.candidates
Historically, for periods prior to the Separation, we have funded our operations primarily with proceeds allocated to our business from financing arrangements entered into by the Former Parent and through the one-time issuance of contingently redeemable non-controlling interests. Prior to
From the Distribution, transfers ofSeparation through July 31, 2023, we have funded our operations primarily with the cash for general operating, investing, and financing activities and net cost allocationcontribution received from the Former Parent were reflected in net investment from Former Parent in our combined balance sheets. The cash reported on our condensed combined balance sheet represents cash held by Biohaven entities at the endSeparation and proceeds from the public offering of our common shares in October 2022. We have incurred recurring losses since our inception and expect to continue to generate operating losses for the period presented.foreseeable future.
As of SeptemberJune 30, 2022,2023, we had cash and cash equivalents of $50.7$147.6 million, excluding marketable securities of $187.5 million and restricted cash of $0.8$54.3 million, relatingof which $40.4 million related to restricted cash held on behalf of Former Parent and $13.9 million related to collateral held by a bankbanks for a letterletters of credit (“LOC”) issued in connection with leased office space in Yardley, Pennsylvania.Pennsylvania and Cambridge, Massachusetts. Cash in excess of immediate requirements is invested in marketable securities and money market funds with a view to liquidity and capital preservation. We continuously assess our working capital needs, capital expenditure requirements, and future investments or acquisitions.
On October 25, 2022, the Company completed a public offering of 28,750,000 of its common shares, including the full exercise of the underwriters' option to purchase additional shares, at a public offering price of $10.50 per share, pursuant to a registration statement on Form S-1 filed with the SEC (the "S-1") that was declared effective by the SEC on October 20, 2022. The net proceeds raised in the offering, after deducting underwriting discounts and expenses of the offering payable by Biohaven, were approximately $282.8 million. The Company intends to use the net proceeds received from the offering for general corporate purposes.
Cash Flows
The following table summarizes our cash flows for each of the periods presented:
Six Months Ended June 30,
 20232022Change
In thousands
Net cash used in operating activities$(122,031)$(126,722)$4,691 
Net cash provided by (used in) investing activities75,195 (36,250)111,445 
Net cash provided by financing activities6,329 109,874 (103,545)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(147)— (147)
Net (decrease) in cash, cash equivalents and restricted cash$(40,654)$(53,098)$12,444 
Nine Months Ended September 30,
 20222021Change
In thousands
Net cash used in operating activities$(222,282)$(112,784)$(109,498)
Net cash (used in) provided by investing activities(40,774)1,145 (41,919)
Net cash provided by financing activities237,417 390,832 (153,415)
Effect of exchange rate changes on cash and cash equivalents and restricted cash— — — 
Net (decrease) increase in cash and restricted cash$(25,639)$279,193 $(304,832)
Operating Activities
Net cash used in operating activities was $122.0 million for the six months ended June 30, 2023 and $126.7 million for the six months ended June 30, 2022 The $4.7 million decrease in net cash used in operating activities for the six months ended June 30, 2023 was primarily driven by the collection of income tax refunds and receivables related to the transition services agreement with Pfizer, partially offset by an increase in R&D spending and personnel costs to support acquired and late-stage programs.
Investing Activities
Net cash provided by investing activities was $75.2 million for the six months ended June 30, 2023, compared to net cash used by investing activities of $36.3 million for the six months ended June 30, 2022. The $111.4 million increase in net cash provided by investing activities for the six months ended June 30, 2023 was primarily driven by an increase in sales and maturities of marketable securities, a decrease in cash payments for IPR&D asset acquisition, and purchases of equipment to support our discovery programs partially offset by an increase in purchases of marketable securities with cash in excess of immediate requirements (see Note 3 to the Condensed Consolidated Financial Statements).
Financing Activities
Net cash provided by financing activities was $6.3 million for the six months ended June 30, 2023 and $109.9 million for the six months ended June 30, 2022. The $103.5 million decrease in net cash provided by financing activities for the six months ended June 30, 2023 was primarily driven by a decrease in proceeds from net transfers from Parent due to the Company operating as a standalone entity for the six months ended June 30, 2023 partially offset by an increase in
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Operating Activities
Netrestricted cash usedheld in operating activities was $222.3 million forconnection with the nine months ended September 30, 2022 and primarily consistedexecution of a net loss of $369.2 million adjusted for non-cash items, including share-based compensation expense of $77.9 million, acquisition of an in-process research and development ("IPR&D") asset of $93.7 million ofthe United States Distribution Services Agreement which $35.0 million was paid in cash and classified as an investing activity and $58.7 million was paid in common shares ofis legally payable to the Former Parent depreciation and amortization of $1.0 million, issuance of Former Parent common shares as payment for license and consulting agreements of $1.8 million, as well as(see Note 13 to the change in our net working capital. The year-over-year increase in cash usage of $109.5 million was primarily due an increase in R&D spending.Condensed Consolidated Financial Statements).
Net cash used in operating activities was $112.8 million for the nine months ended September 30, 2021 and primarily consisted of a net loss of $161.9 million adjusted for non-cash items, including share-based compensation expense of $52.7 million, depreciation and amortization of $0.7 million, issuance of common shares of the Former Parent as payment for license and consulting agreements of $7.9 million, gain from equity method investment of $5.3 million, and other non-cash items of $2.0 million, as well as the change in our net working capital.
Investing Activities
Net cash used in investing activities was $40.8 million for the nine months ended September 30, 2022 and was primarily due to our acquisition of Channel Biosciences LLC for $93.7 million of which $35.0 million was paid in cash and classified as a payment for IPR&D asset acquisition under investing activities and $58.7 million was paid in common shares of the Former Parent.
Net cash provided by investing activities was $1.1 million for the nine months ended September 30, 2021 and was due to $1.9 million in cash acquired from the business acquisition of Kleo partially offset by $0.7 million in purchases of lab equipment to support our early discovery programs.
Financing Activities
Net cash provided by financing activities was $237.4 million for the nine months ended September 30, 2022 and was due to $237.4 million in net transfer from Parent for our general operating, investing, and financing activities and net cost allocations from the Former Parent, excluding share-based compensation.
Net cash provided by financing activities was $390.8 million for the nine months ended September 30, 2021 and was primarily due to $390.4 million in net transfer from Parent for our general operating, investing, and financing activities and net cost allocations from the Former Parent, excluding share-based compensation.
Funding Requirements
We expect our expenses to increase in connection with our ongoing activities, particularly as we advance and expand preclinical activities, clinical trials and potential commercialization of our product candidates. Our costs will also increase as we:
•continue to advance and expand the development of our discovery programs and clinical-stage neurology assets, including the initiation of a Phase 1 clinical trial for BHV-7000 for the treatment of focal epilepsy and a Phase 3 clinical trial for taldefgrobep alfa for the treatment of SMA;
•continue the development of our glutamate modulation product candidate;assets;
•continue to initiate and progress other supporting studies required for regulatory approval of our product candidates, including long-term safety studies, drug-drug interaction studies, preclinical toxicology and carcinogenicity studies;
•initiate preclinical studies and clinical trials for any additional indications for our current product candidates and any future product candidates that we may pursue;
•continue to build our portfolio of product candidates through the acquisition or in-license of additional product candidates or technologies;
•continue to develop, maintain, expand and protect our intellectual property portfolio;
•pursue regulatory approvals for our current and future product candidates that successfully complete clinical trials;
•support our sales, marketing and distribution infrastructure to commercialize any future product candidates for which we may obtain marketing approval;
•hire additional clinical, medical, commercial, and development personnel; and
•incur additional legal, accounting and other expenses in operating as a public company.
We expect that our cash, cash equivalents and marketable securities, as of the date of this Quarterly Report on Form 10-Q, will be sufficient to fund our current forecast for operating expenses, financial commitments and other cash requirements for more than one year. We expect we will need to raise additional capital until we are profitable. If no additional capital is raised through either public or private equity financings, debt financings, strategic relationships, alliances and licensing agreements, or a combination thereof, we may delay, limit or reduce discretionary spending in areas related to research and development activities and other
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general and administrative expenses in order to fund our operating costs and working capital needs.
We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We expect that we will require additional capital to pursue in-licenses or acquisitions of other product candidates. If we receive regulatory approval for troriluzole, or our other product candidates, we expect to incur commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize or whether we commercialize jointly or on our own.
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on and could increase significantly as a result of many factors, including:
•the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical studies and clinical trials;
•the costs, timing and outcome of regulatory review of our product candidates;
•the effect of COVID-19 pandemic on our business operations and funding needs;
•the costs and timing of hiring new employees to support our continued growth;
•the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; and
•the extent to which we acquire or in-license other product candidates and technologiestechnologies;
•the timing, receipt and amount of sales of, or milestone payments related to or royalties on, our current or future product candidates, if any; and
•other capital expenditures, working capital requirements, and other general corporate activities.
Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of public and private equity offerings, debt financings, other third-party funding, strategic alliances, licensing arrangements or marketing and distribution arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing shareholders. Debt financing and preferred equity financing, if available, may involve agreements that
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include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through other third-party funding, strategic alliances, licensing arrangements or
marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we will be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.
Contractual Obligations and Commitments
Except as discussed in Note 7,11, "Commitments and Contingencies" to our Condensed CombinedConsolidated Financial Statements included in Item 1, “Unaudited Condensed CombinedConsolidated Financial Statements,” of this Quarterly Report on Form 10-Q, there have been no material changes to our contractual obligations and commitments as included in our audited combinedconsolidated financial statements included in Exhibit 99.1 to the 2022 Form 10.10-K.
Critical Accounting Policies and Significant Judgments and Estimates
We have prepared our condensed combinedconsolidated financial statements in accordance with accounting principles generally accepted in the United States ("GAAP"). Our preparation of our condensed combinedconsolidated financial statements requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, expenses, and related disclosures at the date of the condensed combinedconsolidated financial statements. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could therefore differ materially from these estimates under different assumptions or conditions.
During the ninesix months ended SeptemberJune 30, 2022,2023, there were no material changes to our critical accounting policies as reported in our annual combinedconsolidated financial statements included in Exhibit 99.1 to the 2022 Form 10.10-K.
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations, if applicable, is disclosed in Note 2 to our condensed combinedconsolidated financial statements appearing at the beginning of this Quarterly Report on Form 10-Q.
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Emerging Growth Company Status
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups (JOBS) Act (the "JOBS Act"), and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” These exemptions generally include, but are not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
We plan to take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us as long as we qualify as an emerging growth company, except that we have irrevocably elected not to take advantage of the extension of time to comply with new or revised financial accounting standards available under Section 102(b) of the JOBS Act.
We will, in general, remain as an emerging growth company for up to five full fiscal years following the Distribution. We would cease to be an emerging growth company and, therefore, become ineligible to rely on the above exemptions, if we:
•have more than $1.235 billion in annual revenue in a fiscal year;
•issue more than $1 billion of non-convertible debt during the preceding three-year period; or
•become a “large accelerated filer” as defined in Exchange Act Rule 12b-2, which would occur after: (i) we have filed at least one annual report pursuant to the Exchange Act; (ii) we have been an SEC-reporting company for at least twelve months; and (iii) the market value of our common shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.
We will cease to be an “emerging growth company” effective December 31, 2023, because the aggregate market value of our common shares held by non-affiliates exceeded $700 million as of June 30, 2023.
Smaller Reporting Company Status
Additionally, we are aA “smaller reporting company,” as defined in Rule 12b-2 under the Exchange Act. As such, we areAct, is eligible for exemptions from various reporting requirements applicable to other public companies that are not smaller reporting companies, including, but not limited to, reduced
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disclosure obligations regarding executive compensation.
We will remainare a smaller reporting company as long as either:
•(i) the market value of our common shares held by non-affiliates is less than $250 million as of the last business day of our most recently completed second fiscal quarter; or
•(ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our common shares held by non-affiliates is less than $700 million as of the last business day of our most recently completed second fiscal quarter.
As of June 30, 2023, the aggregate market value of our common shares held by non-affiliates exceeded $700 million. We may continue to take advantage of certain reduced disclosures available to smaller reporting companies through the filing of our Annual Report on Form 10-K for the year ending December 31, 2023.
Item 3. Quantitative and Qualitative Disclosures about Market Risks
Foreign Currency Translation
Our operations include activities in countries outside the U.S. As a result, our financial results are impacted by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets where we operate. Our monetary exposures on our balance sheet are currently immaterial to our financial position.position as of June 30, 2023.
We do not engage in any hedging activities against changes in foreign currency exchange rates.
MarketInterest Rate Risk
As of SeptemberJune 30, 2022,2023, we participatedinvest our excess cash balances in marketable securities of highly rated financial institutions and investment-grade debt instruments. We seek to diversify our investments and limit the amount of investment concentrations for individual institutions, maturities and investment types. Most of our interest-bearing securities are subject to interest rate risk and could decline in value if interest rates fluctuate. Based on the type of securities we hold, we do not believe a change in interest rates would have a material impact on our financial statements. If interest rates were to increase or decrease by 1.00%, the fair value of our investment portfolio would (decrease) increase by approximately $(0.5) million and $0.5 million, respectively.
We do not engage in any hedging activities against changes in interest rates.
Credit Risk
Financial instruments that potentially expose the Company to concentrations of credit risk consist of cash, cash equivalents, and short-term debt securities. The Company maintains a portion of its cash deposits in government insured institutions in excess of government insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts. The Company's cash management policy permits investments in U.S. federal government and federal agency securities, corporate bonds or commercial paper, supranational and sovereign obligations, certain qualifying money market mutual funds, certain repurchase agreements, and places restrictions on credit ratings, maturities, and concentration by type and issuer. The Company is exposed to credit risk in the Former Parent’s centralized treasury management, including centralizedevent of a default by the financial institutions holding its cash in excess of government insured limits and securities management,in the event of default by corporations and as a result, we did not reportgovernments in which it holds investments in cash equivalents and short-term debt securities, to the extent recorded on the condensed consolidated balance sheet.
We have not experienced any credit losses or marketable securities on our condensed combined balance sheets. As such, our exposure to market riskrecorded any allowance for credit losses related to changing interest rates was minimal.our cash, cash equivalents, and short-term debt securities.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to a company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the
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disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its
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stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.
Based on the evaluation of our disclosure controls and procedures as of SeptemberJune 30, 2022,2023, our Chief Executive Officer and Chief Financial Officer have concluded that, as of SeptemberJune 30, 2022,2023, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Controls over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended SeptemberJune 30, 20222023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be subject to litigation and claims arising in the ordinary course of business. We are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results, cash flows or financial condition.
Item 1A.  Risk Factors
Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. Our risk factors have not changed materially from those described in "Risk"Part I, Item 1A. Risk Factors" of our Registration StatementAnnual Report on Form 10, as amended (Reg. No. 001-41477), which was declared effective by10-K for the SEC on September 22,fiscal year ended December 31, 2022, (the "Form 10"). For a further discussion of risks that could materially affect our business, financial condition or results of operations, we refer you to our Registration Statement on Form S-1, as amended (File No. 333-267928), which was filed with the SECSecurities and Exchange Commission on October 20, 2022 (the "S-1"). In additionMarch 23, 2023, except for the risk factor noted below.
Effective December 31, 2023, we will be a large accelerated filer and no longer qualify as a smaller reporting company or emerging growth company, which will increase our costs and demands on management.
Based on the Company's public float as of June 30, 2023, the Company will become a “large accelerated filer” and lose “emerging growth company” status on December 31, 2023. Additionally, due to the information set forthCompany’s public float as of June 30, 2023, we will no longer qualify as a “smaller reporting company.” However, we are not required to reflect the change in our “smaller reporting company” status, and comply with the associated increased disclosure obligations, until our quarterly report for the three-month period ending March 31, 2024. Due to this Quarterly Report on Form 10-Q, you should carefully considerupcoming transition, we are devoting significant time and efforts to implement and comply with the risk factors described in "Risk Factors"additional standards, rules and regulations that will apply to us upon becoming a large accelerated filer and losing our smaller reporting company and emerging growth company status, diverting such time from the day-to-day conduct of our business operations. Compliance with the S-1.additional requirements of being a large accelerated filer will also increase our legal, accounting and financial compliance costs. These requirements include, but are not limited to:
The risks disclosed•compliance with the auditor attestation requirements in the S-1assessment of our internal control over financial reporting;
•compliance with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and information provided elsewherethe financial statements;
•full disclosure obligations regarding executive compensation in this report,our periodic reports and proxy statements; and
•compliance with the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Due to the complexity and logistical difficulty of implementing the standards, rules and regulations that apply to a large accelerated filer, there is an increased risk that we may be found to be in non-compliance with such standards, rules and regulations or to have significant deficiencies or material weaknesses in our internal controls over financial reporting. Any failure to maintain effective disclosure controls and internal control over financial reporting could materially affect our business, financial condition or results of operations. Additional risks and uncertainties not currently known or we currently deem to be immaterial may materially adversely affect our business, results of operations, and financial condition or results of operations. Except for such additional information and the risk factors set forth below, we believe there have been no other material changes in our risk factors from those disclosedcould cause a decline in the S-1.trading price of our common shares.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Biohaven Ltd. was incorporated on May 2, 2022 under the laws of the British Virgin Islands. On May 2, 2022, Biohaven Pharmaceutical Holding Company Ltd. acquired 100 common shares of Biohaven Ltd. for a nominal capital contribution.None.
Item 5. Other Information
On November 5, 2022 our Board of Directors appointed George Clark, age 39, Chief Accounting Officer of the Company effective as of November 8, 2022. Mr. Clark joined the Company in March 2018 as Head of SEC Reporting and Technical Accounting, and most recently served as Chief Accounting Officer of the Former Parent from August, 2021 through October 3, 2022. Mr. Clark has also served as Vice President, Finance for BPI since March 2018. Previously, Mr. Clark served in the audit practice at KPMG LLP as Senior Manager from October
2017 through March 2018, and Manager from June 2015 through October 2017. Prior to KPMG, Mr. Clark served at The Hartford Financial Services Group, Inc. ("The Hartford") as Assistant Director, External GAAP Reporting from December 2013 through June 2015, and as Senior Derivative Accounting Specialist from August 2012 through December 2013. Prior to The Hartford, Mr. Clark began his career in the assurance and advisory practices at PricewaterhouseCoopers LLP from September 2010 through August 2012. Mr. Clark received his Bachelor and Master of Science degrees in accounting from the University of Connecticut, and is a licensed Certified Public Accountant in the State of Connecticut.

None.
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Item 6. Exhibits
Exhibit No. Description
2.1
2.2
2.3
3.1
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
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21.1
31.1 
31.2 
32.1‡ 
101 The following materials from the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended SeptemberJune 30, 20222023 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Condensed CombinedConsolidated Balance Sheets, (ii) the Condensed CombinedConsolidated Statements of Operations and Comprehensive Loss, (iii) the Condensed CombinedConsolidated Statements of Cash Flows and (iv) the Notes to Condensed CombinedConsolidated Financial Statements, tagged as blocks of text and including detailed tags.
104Cover Page Interactive Data File (formatted in iXBRL in Exhibit 101).

‡    These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 BIOHAVEN LTD.
Dated: November 9, 2022July 31, 2023 
 By:/s/ Vlad Coric, M.D.
  Vlad Coric, M.D.
  Chief Executive Officer
  (On behalf of the Registrant and as the Principal Executive Officer)
   
 By:/s/ Matthew Buten
  Matthew Buten
  Chief Financial Officer
  (Principal Financial Officer)

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