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Biohaven lost close to $400 million in market value Friday on news that the Connecticut-based drug developer had withdrawn an application to get one of its most advanced experimental therapies approved in Europe.
The company first asked the European Medicines Agency for approval in late 2023 , believing enough evidence had been gathered to show its drug, tentatively branded as Dazluma, is effective at treating “spinocerebellar ataxia,” a type of rare genetic disorder that impairs nerve cells. Once in the body, the drug is designed to break down into riluzole, a molecule already approved in Europe and the U.S. for patients with ALS.
On Friday, the EMA revealed that Biohaven withdrew its application on March 24. The agency’s main drug review committee said, by that time, it had some concerns about Dazluma, and its provisional opinion was a marketing authorization couldn’t be granted. The committee explained that not only was Dazluma’s effectiveness not proven, but Biohaven had requested the drug receive a “new active substance” classification, which comes with significant commercial benefits.
EMA staff weren’t convinced the drug is significantly different than plain riluzole. In an emailed statement, Biohaven CEO Vlad Coric said his company ultimately pulled the approval application once it became clear the committee didn’t intend on bestowing that classification.
Coric added that Biohaven is committed to quickly providing the committee with either further arguments, “appropriate data,” or both, and plans to do so in approximately three months. The company “remains committed to the Dazluma program and plans to resubmit to EMA this year once the data is generated to respond to” the new active substance issue.
"In our view, we view this as a speed bump, but not ultimately a roadblock, on the [European approval] front," wrote Charles Duncan, an analyst for Cantor Fitzgerald, in a note to clients.
Biohaven shares were down roughly 16% Friday afternoon, to trade around $19.50 apiece.
Meanwhile, the company has also submitted an application to the Food and Drug Administration, and an approval verdict is expected sometime between July and the end of September. To Leonid Timashev, an analyst at the investment bank RBC Capital Markets, the withdrawal in Europe adds risk to the U.S. review, as it “calls into question whether the FDA would be similarly strict.”
Biohaven investors have “been more bearish lately, and questions have focused on what can drive a turnaround in shares,” he wrote in a note to clients. Most believe FDA approval is “critical to helping the stock recover. We believe this puts additional pressure on the news, and explains the outsized stock move.”
In late 2022, Biohaven completed selling off its portfolio of migraine medications to Pfizer for nearly $12 billion . Since then, the new company has been trying to find its next success story , amassing a research pipeline with more than a dozen experimental medicines targeting a range of disease categories, from oncology to immunology to neuroscience .
Yet a couple of those medicines recently hit setbacks in clinical testing . Investor confidence in the pipeline seems to have waned over the past year, with Biohaven shares now having lost two-thirds of their value from when they peaked at roughly $58 in March 2024.
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