Biohaven Ltd.
03/02/2026 | Press release | Distributed by Public on 03/02/2026 15:11
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K, or this Annual Report. Discussions of 2023 items and year-to-year comparisons between the years ended December 31, 2024 and 2023 that are not included in this Form 10-K can be found within "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this report, including those set forth under Item 1A. "Risk Factors" and under "Cautionary Note Regarding Forward-Looking Statements" in this Annual Report.
Overview
We are a biopharmaceutical company focused on the discovery, development, and commercialization of life-changing treatments in key therapeutic areas, including immunology, neuroscience, and oncology. We are advancing our innovative portfolio of therapeutics, leveraging our proven drug development experience and multiple proprietary drug development platforms. In the fourth quarter of 2025, we initiated a strategic reprioritization of our clinical development programs are now focused on three key areas to prioritize resources. Our key clinical programs include Kv7 ion channel modulation for epilepsy; Molecular Degrader of Extracellular Proteins ("MoDE") and Targeted Removal of Aberrant Protein ("TRAP") extracellular protein degradation for immunological diseases; and myostatin-activin pathway targeting agent for neuromuscular and metabolic diseases, including obesity (collectively, the "key programs").
For a full discussion of our programs, including recent developments, refer to "Item 1. Business" included in this Annual Report on Form 10-K.
Separation from Biohaven Pharmaceutical Holding Company Ltd.
On October 3, 2022, the Former Parent completed the Separation from Biohaven Ltd. As a result of the Separation, Biohaven Ltd. became an independent, publicly traded company as of October 3, 2022, and commenced regular way trading under the symbol "BHVN" on the NYSE on October 4, 2022.
Biohaven is a British Virgin Islands ("BVI") corporation and was a wholly owned subsidiary of the Former Parent prior to the Separation.
Agreements with the Former Parent
We had entered into a Distribution Agreement and various other 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 Separation. For additional information regarding these agreements, see Note 14, "Related Party Transactions," of the Notes to the Consolidated Financial Statements appearing elsewhere in this Annual Report on Form 10-K.
Recent Developments
The following is a summary of key developments affecting our business in 2025 (excluding updates to our programs, which are discussed in "Item 1. Business" included in this Annual Report on Form 10-K):
Note Purchase Agreement
On April 28, 2025 (the "Closing Date"), the Company and certain of its subsidiaries entered into a Note Purchase Agreement (the "Note Purchase Agreement" or "NPA"), by and among Biohaven Therapeutics Ltd., as issuer (the "Issuer"), the Company and certain subsidiaries of the Company, as obligors (together with the Issuer, the "Obligors"), the purchasers party thereto (the "Purchasers") and Beetlejuice SA LLC, an affiliate of Oberland Capital Management LLC ("Oberland"), as purchaser agent (the "Purchaser Agent"). Pursuant to the Note Purchase Agreement, the Purchasers agreed to purchase senior secured notes from the Issuer (i) subject to the satisfaction of certain customary closing conditions, in an initial tranche shortly after the Closing Date for an aggregate purchase price of $250 million (the "First Notes") and (ii) subject to the satisfaction of certain conditions, including the receipt of approval from the U.S. Food and Drug Administration (the "FDA") for troriluzole, in a second tranche in up to three purchases on or before June 30, 2026 for an aggregate purchase price of $150 million (the "Second Notes"). The proceeds from the sale of the First Notes and the Second Notes may be used for working capital and permitted business purposes. The Issuer may also sell to the Purchasers, at the Issuer's option and subject to the approval of each Purchaser agreeing to participate therein, in its sole discretion, additional notes in up to four purchases for an aggregate purchase price of $200 million (the "Third Notes" and, together with the First Notes and the Second Notes, the "Notes"), the proceeds of which may be used solely to fund
permitted acquisitions and related costs and expenses. We received approximately $250 million in proceeds from the sale of the First Notes in April 2025.
The Purchasers will be entitled to receive payments (the "Revenue Payments") equal to, initially, 6.25% of the global net sales of troriluzole ("Net Sales"), which will increase pro rata upon the purchase of any of the Second Notes. If the aggregate amount of Revenue Payments (if troriluzole has received FDA approval) and any Milestone Payment (as defined below) made by the Issuer to the Purchasers pursuant to the Note Purchase Agreement as of December 31, 2030 (the "Test Date") equals or exceeds the amount of the aggregate purchase price for the Notes paid by the Purchasers (the "Total Funded Amount") to the Issuer pursuant to the Note Purchase Agreement (the "Test Date Condition"), the then-applicable percentage of Net Sales payable as Revenue Payments will automatically decrease by 60% for all subsequent years. If the Test Date Condition is not satisfied by the Test Date, the then-applicable percentage of Net Sales payable as Revenue Payments will automatically increase for all subsequent years to the lesser of (i) a rate that would have provided the Purchasers with 100% of the Total Funded Amount as of the Test Date had such rate applied from the Closing Date through and including the Test Date and (ii) 80%. The Revenue Payments will become payable to the Purchasers on a quarterly basis after the Closing Date.
The Issuer will also be obligated to pay to the Purchasers a milestone payment (the "Milestone Payment") equal to 35% of the Funded Amount upon the approval by the FDA or European Medicines Agency ("EMA") of troriluzole or other Company products. The Milestone Payment will be payable in equal quarterly installments starting in the quarter after the approval is received or, if the Milestone Payment is earned after the Test Date, in one single payment on the 10thBusiness Day after the date the approval is received.
In addition to the Revenue Payments and the Milestone Payment discussed above, if the Test Date Condition is not satisfied, then the Company will be obligated to make a one-time payment to the Purchasers equal to 100% of the Total Funded Amount as of the Test Date less the aggregate Revenue Payments and Milestone Payments made to the Purchasers as of the Test Date (the "True-Up Payment"). If troriluzole has not received FDA approval for the treatment of obsessive compulsive disorder or spinocerebellar ataxia as of the Test Date, any Milestone Payments shall be excluded in calculating the True-Up Payment.
The Purchasers' right to receive the Revenue Payments shall terminate on the date on which the Purchasers have received Revenue Payments and Milestone Payments (the "Total Payments"), together with any True-Up Payment paid by the Issuer to the Purchasers, in an aggregate amount equal to the then-applicable Cap Amount, unless the Note Purchase Agreement is terminated prior to such date. The "Cap Amount" means an amount equal to the Total Funded Amount multiplied by (x) on or prior to the earlier of the Test Date and the date the Test Date Condition is satisfied, 1.65 with respect to the Second Notes and 1.95 with respect to the First Notes and any Third Notes, and (y) after the earlier of the Test Date and the date the Test Date Condition is satisfied, (a) with respect to the First Notes and Third Notes, (i) if the Test Date Condition is satisfied, 1.60, (ii) if the Test Date Condition is not satisfied and the Total Payments as of the Test Date are equal to or greater than 90% of the Total Funded Amount, 1.80, (iii) if the Test Date Condition is not satisfied and the Total Payments as of the Test Date are less than 90% but equal to or greater than 50% of the Total Funded Amount, 1.95, (iv) if the Test Date Condition is not satisfied and the Total Payments as of the Test Date are less than 50% of the Total Funded Amount, 2.10 if on or prior to the 8thanniversary of the Closing Date and 2.25 if after the 8thanniversary of the Closing Date, and (b) with respect to the Second Notes, (i) if the Test Date Condition is satisfied, 1.40, (ii) if the Test Date Condition is not satisfied and the Total Payments as of the Test Date are equal to or greater than 50% of the Funded Amount, 1.65, and (iii) if the Test Date Condition is not satisfied and the Total Payments as of the Test Date are less than 50% of the Funded Amount, 1.75.
If the Purchasers have not received Total Payments equal to the then-applicable Cap Amount as of the 10thanniversary of the Closing Date (or, if no products of the Company have been approved by the FDA or EMA on or before the Test Date, the 8thanniversary of the Closing Date), the Issuer will be obligated to pay to the Purchasers an amount equal to the Cap Amount less the Total Payments made as of such date.
Under the Note Purchase Agreement, the Issuer has an option (the "Call Option") to terminate the Note Purchase Agreement and repurchase the Notes in full at any time upon advance written notice. Additionally, the Purchasers have an option (the "Put Option") to terminate the Note Purchase Agreement and to require the Company to repurchase the Notes in full upon certain enumerated events, including, but not limited to, payment defaults, covenant defaults, material breaches of representations and warranties, cross defaults to material debt, bankruptcy and insolvency defaults, material judgment defaults, key man event or a change of control. The required purchase price with respect to the Call Option and the Put Option, as applicable, shall be (a) with respect to the portion of the Total Funded Amount relating to the First Notes and the Third Notes, (i) 120% of such amount if Purchasers exercise the Put Option (other than in connection with a change of control or in connection with a sale of all or substantially all assets relating to troriluzole under certain conditions) on or prior to the first anniversary of the Closing Date, (ii) 135% of such amount if the First Notes and Third Notes are repurchased voluntarily or in connection with a change of control on or prior to the date that is 18 months after the Closing Date or in connection with a definitive agreement for the sale of all or substantially all assets relating to
troriluzole by August 31, 2025 and the repurchase of the Notes by September 30, 2025 and provided that, in either case, no Default or Event of Default is continuing at such time, (iii) 150% of such amount if the First Notes and Third Notes are repurchased on or prior to the date that is 18 months after the Closing Date and the prior clauses (i) and (ii) do not apply, (iv) 175% of such amount if the First Notes and Third Notes are repurchased from and after the date that is 18 months after the Closing Date and prior to the third anniversary of the Closing Date and (v) 195% of such amount if the First Notes and Third Notes are repurchased after the third anniversary of the Closing Date, provided that if the Total Payments as of the Test Date are less than 50% of the Total Funded Amount, the required purchase price shall be 210% of such amount if such purchase price is paid on or prior to the 8thanniversary of the Closing Date, and 225% of such amount if such purchase price is paid after the 8thanniversary of the Closing Date, and (b) with respect to the portion of the Total Funded Amount relating to the Second Notes, (i) 120% of such amount if the Second Notes are repurchased on or prior to the first anniversary of the first purchase date for such Second Notes, (ii) 135% of such amount if the Second Notes are repurchased after the first anniversary but on or prior to the second anniversary of the first purchase date for such Second Notes and (iii) 175% of such amount if the Second Notes are repurchased after the second anniversary of the first purchase date for such Second Notes, except in the event that the Total Payments as of the Test Date are equal to or greater than 50% of the Total Funded Amount, in which case the required purchase price shall be 165% of such amount, minus in each case in the preceding clauses (a) and (b), the aggregate Total Payments and any True-Up Payment made to the Purchasers prior to such date.
The Issuer's obligations under the Note Purchase Agreement are guaranteed by the Company and certain of its subsidiaries (the "Guarantors"). To secure the Issuer's obligations under the Note Purchase Agreement and the Guarantors' obligations under the guarantees, the Obligors have granted the Purchaser Agent, for the benefit of the Purchasers, a security interest in the Obligors' cash and equity interests and in specific assets related to troriluzole.
The Note Purchase Agreement contains affirmative and negative covenants, including covenants that limit or restrict the Obligors' and their subsidiaries' ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into certain transactions with affiliates, pay dividends or make distributions, repurchase stock and enter into restrictive agreements, in each case subject to certain exceptions set forth in the Note Purchase Agreement. Refer to "Part I, Item 1A. Risk Factors" of this Form 10-K for further discussion on the covenants set forth in the Note Purchase Agreement.
Components of Our Results of Operations
Revenue
To date, 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 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") 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 from our clinical personnel and 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.
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. We 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 milestones 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.
General and Administrative Expenses
General and administrative ("G&A") 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, and 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
Other Income, Net
Other income, net during the year ended December 31, 2025 primarily consists of changes in the fair value of our forward contract and derivative liabilities, net investment income, and the changes in fair value of our note payable liability under the Note Purchase Agreement.
Prior to settlement, the fair value of the forward contracts and derivative liabilities recognized in connection with the Knopp Amendment (as defined below) was determined using a Monte Carlo simulation of the Company's stock price over the respective duration and terms of each instrument being valued. Refer to Note 4, "Fair Value of Financial Assets and Liabilities" to the accompanying consolidated financial statements included in this Form 10-K for detail on valuation inputs and methodology. The fair value of these liabilities were recorded on the consolidated balance sheets with changes in fair value recorded in other income, net in the consolidated statements of operations.
Net investment income is comprised of interest income and net accretion and amortization on investments in addition to realized gains and losses. Refer to Note 3, "Marketable Securities," for further discussion of our investments.
As permitted under ASC 825, "Financial Instruments," we elected the fair value option for our note payable liability under the Note Purchase Agreement. Accordingly, the note payable was initially measured at issuance based on an estimated fair value and is subsequently remeasured on a recurring basis at each reporting period date. Changes in fair value, other than those attributed to changes in instrument-specific credit risk, are recorded within other (expense) income, net on our consolidated statements of operations and comprehensive loss. Refer to Note 4, "Fair Value of Financial Assets and Liabilities," to the accompanying consolidated financial statements included in this Form 10-K for detail on valuation inputs and methodology and Note 6, "Notes Payable," to the accompanying consolidated financial statements included in this Form 10-K for further discussion of the terms of the Note Purchase Agreement.
Other income, net during the year ended December 31, 2024 primarily consisted of changes in the fair value of our forward contract and derivative liabilities and net investment income.
Provision (Benefit) for Income Taxes
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 our programs under a master services agreement with our subsidiaries, Biohaven Pharmaceuticals, Inc. ("BPI") and Biohaven Biosciences Ireland Limited ("BBIL"). Under these arrangements, both companies were profitable during the years ended December 31, 2025, 2024, and 2023.BPI and BBIL are subject to taxation in the United States and Ireland, respectively. As such, in each reporting period, the tax provision includes the effects of the results of profitable operations of BPI and BBIL.
At December 31, 2025 and 2024, we continued to maintain a full valuation allowance against our net deferred tax assets, comprised primarily of research and development tax credit carryforwards, and net operating loss carryforwards, based on management's assessment that it is more likely than not that the deferred tax assets will not be realized.
Our income tax provision (benefit) primarily relates to the profitable operations of our subsidiaries in the United States and Ireland.
Results of Operations
Comparison of the Years Ended December 31, 2025 and 2024
The following table summarizes our results of operations for the years ended December 31, 2025 and 2024:
|
Year Ended December 31,
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| In thousands | 2025 | 2024 | Change | |||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Research and development | $ | 635,065 | $ | 795,871 | $ | (160,806) | ||||||||||||||
| General and administrative | 110,313 | 89,240 | 21,073 | |||||||||||||||||
| Total operating expenses | 745,378 | 885,111 | (139,733) | |||||||||||||||||
| Loss from operations | (745,378) | (885,111) | 139,733 | |||||||||||||||||
|
Other income, net:
|
||||||||||||||||||||
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Other income, net
|
7,998 | 39,424 | (31,426) | |||||||||||||||||
|
Total other income, net
|
7,998 | 39,424 | (31,426) | |||||||||||||||||
| Loss before provision (benefit) for income taxes | (737,380) | (845,687) | 108,307 | |||||||||||||||||
| Provision (benefit) for income taxes | 1,442 | 735 | 707 | |||||||||||||||||
| Net loss | $ | (738,822) | $ | (846,422) | $ | 107,600 | ||||||||||||||
Research and Development Expenses
| Year Ended December 31, | ||||||||||||||||||||
| In thousands | 2025 | 2024 | Change | |||||||||||||||||
| Direct research and development expenses by program: | ||||||||||||||||||||
|
BHV-4157 (Troriluzole)
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$ | 49,241 | $ | 63,983 | $ | (14,742) | ||||||||||||||
|
BHV-2000 (Taldefgrobep Alfa)
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23,481 | 59,710 | (36,229) | |||||||||||||||||
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BHV-7000 & BHV-7010 (Kv7)
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115,269 | 136,422 | (21,153) | |||||||||||||||||
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BHV-2100 (TRPM3)
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27,716 | 29,044 | (1,328) | |||||||||||||||||
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BHV-8000 (TYK2/JAK1)
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34,864 | 12,697 | 22,167 | |||||||||||||||||
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BHV-1300 (IgG Degrader)
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36,277 | 30,078 | 6,199 | |||||||||||||||||
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BHV-1310 (IgG Degrader)
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5,486 | 13,341 | (7,855) | |||||||||||||||||
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BHV-1400 (IgA Degrader)
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27,860 | 19,572 | 8,288 | |||||||||||||||||
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BHV-1600 (β1-AR AAB Degrader)
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6,935 | 14,650 | (7,715) | |||||||||||||||||
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BHV-1510 (Trop2)
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37,582 | 28,540 | 9,042 | |||||||||||||||||
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BHV-1530 (FGFR3)
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22,670 | 14,554 | 8,116 | |||||||||||||||||
|
Knopp amendment expense
|
- | 171,850 | (171,850) | |||||||||||||||||
| Other programs | 1,850 | 2,821 | (971) | |||||||||||||||||
| Unallocated research and development costs: | ||||||||||||||||||||
| Personnel related (including non-cash share-based compensation) | 150,007 | 116,238 | 33,769 | |||||||||||||||||
| Preclinical research programs | 70,203 | 57,181 | 13,022 | |||||||||||||||||
| Other | 25,624 | 25,190 | 434 | |||||||||||||||||
| Total research and development expenses | $ | 635,065 | $ | 795,871 | $ | (160,806) | ||||||||||||||
R&D expenses, including non-cash share-based compensation costs, were $635.1 million for the year ended December 31, 2025, compared to $795.9 million for the year ended December 31, 2024. The decrease of $160.8 million was primarily due to a one-time non-cash expense during the year ended December 31, 2024 of $171.9 million paid to Knopp for a milestone and royalty buyback related to the BHV-7000 and broader Kv7 platform (the buyback reduced our potential future milestone payments by $867.5 million and replaced the scaled high single digit to low teens royalty payment obligations with a flat royalty payment in the mid-single digits for the Kv7 programs). The decrease was also due to decreased program expense for BHV-2000, BHV-4157 (troriluzole), and BHV-7000 & BHV-7010 (Kv7). These decreases were partially offset by increased direct program spend for advancing clinical trials and preclinical research programs in 2025, including one-time developmental milestone payments of $15.0 million, $12.0 million, and $10.0 million for our BHV-8000, BHV-1510 and BHV-1530 programs, respectively, as well as increased non-cash share-based compensation expense. The increase in program expense for BHV-1510 during the year ended December 31, 2025 was partially offset by a $10.9 million non-cash upfront payment for the acquisition of Pyramid Biosciences, Inc. during the first quarter of 2024 and a $5.7 million non-cash developmental milestone for BHV-1510 which became due during the first quarter of 2024. The increase in preclinical research programs during the year ended December 31, 2025 was primarily due to an upfront share payment valued at $4.9 million and $4.4 million of expense recorded for an upfront cash payment related to agreements entered into during the first quarter of 2025.
Non-cash share-based compensation expense was $72.8 million for the year ended December 31, 2025, an increase of $30.2 million as compared to the same period in 2024. Non-cash share-based compensation expense was higher in 2025 primarily due to our annual equity incentive awards granted in the first quarter of 2025.
General and Administrative Expenses
General and administrative expenses were $110.3 million for the year ended December 31, 2025, compared to $89.2 million for the year ended December 31, 2024. The increase of $21.1 million was primarily due to increased non-cash share-based compensation expense and increased expenses related to fees incurred in connection with the Note Purchase Agreement and other legal costs. Non-cash share-based compensation expense was $39.6 million for the year ended December 31, 2025, an increase of $10.2 million as compared to the same period in 2024. Non-cash share-based compensation expense was higher in 2025 primarily due to our annual equity incentive awards granted in the first quarter of 2025.
Other Income, Net
Other income, net was other income of $8.0 million for the year ended December 31, 2025, compared to other income of $39.4 million for the year ended December 31, 2024. The decrease of $31.4 million was primarily due to an increase of $27.2 million in losses recorded for the non-cash changes in the fair value of our forward contracts and derivative liabilities recorded in connection with the Knopp Amendment, a $6.7 million decrease in investment income, and other expense of $5.9 million recognized to write-off an impaired asset related to the NPA during the year ended December 31, 2025. This was partially offset by an increase in non-cash gains of $8.7 million related to changes in fair value of our notes payable liability under the NPA. See Note 2, "Summary of Significant Accounting Policies," and Note 6, "Notes Payable," to the accompanying consolidated financial statements included in this Form 10-K for discussion of the NPA and Note 4, "Fair Value of Financial Assets and Liabilities," and Note 11, "License, Acquisitions and Other Agreements," for discussion of the forward contract and derivative liabilities recorded in connection with the Knopp Amendment.
Provision for Income Taxes
We recorded income tax provisions of $1.4 million and $0.7 million for the year ended December 31, 2025 and 2024, respectively.
Liquidity and Capital Resources
Since our inception, we have not generated any revenue and have incurred significant operating losses and negative cash flows from operations. We will not generate revenue 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, regulatory and commercial milestones and royalty payments. In addition, we may incur expenses in connection with the in-license or acquisition of additional product candidates.
Historically, we have funded our operations primarily with funding from the Former Parent, including a cash contribution received at the Separation, proceeds from the sale of our common shares, and proceeds from the sale of senior secured notes under our Note Purchase Agreement. The Company has incurred recurring losses since its inception and expects to continue to generate operating losses for the foreseeable future.
As of December 31, 2025, we had cash and cash equivalents of $230.0 million and marketable securities of $89.2 million. 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.
Cash Flows
The following table summarizes our cash flows for each of the periods presented:
| Year Ended December 31, | ||||||||||||||
| In thousands | 2025 | 2024 | ||||||||||||
| Net cash used in operating activities | $ | (609,438) | $ | (582,453) | ||||||||||
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Net cash provided by (used in) investing activities
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300,561 | (244,974) | ||||||||||||
| Net cash provided by financing activities | 439,117 | 677,774 | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (3) | 75 | ||||||||||||
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
$ | 130,237 | $ | (149,578) | ||||||||||
Operating Activities
Net cash used in operating activities was $609.4 million in 2025 and $582.5 million in 2024. The $27.0 million increase in net cash used in operating activities in 2025 was driven primarily by:
•an increase in cash payments for research and development to advance clinical trials and preclinical research programs primarily due to one-time development milestone payments of $15.0 million, $12.0 million, and $10.0 million for BHV-8000, BHV-1510, and BHV-1530, respectively, and a one-time upfront payment of $3.8 million related to an agreement entered into in 2025;
•an increase in cash payments for general and administrative professional services; and
•a decrease in cash payments for employee compensation due to our 2025 employee bonus being paid in the first quarter of 2026, mostly offset by a decrease in tax refunds.
Investing Activities
Net cash provided by investing activities was $300.6 million in 2025, compared to net cash used in investing activities of $245.0 million in 2024. The $545.5 million increase in net cash provided by investing activities in 2025 was driven primarily by an increase in maturities of marketable securities and a decrease in purchases of marketable securities in 2025 (see Note 3, "Marketable Securities," to the Consolidated Financial Statements), as compared to the prior year.
Financing Activities
Net cash provided by financing activities was $439.1 million in 2025 and $677.8 million in 2024. The $238.7 million decrease in net cash provided by financing activities in 2025 was driven primarily by a decrease in proceeds from the issuance of common shares in 2025 as compared to the same period in the prior year, related to proceeds from our April 2024 and October 2024 public equity offerings and at-the-market sales of common shares in connection with our Equity Distribution Agreement in 2024. This was partially offset by proceeds from the issuance of notes payable in 2025 related to our Note Purchase Agreement, and proceeds from our November 2025 public equity offering.
2025 Public Offering
On November 13, 2025, we closed an underwritten public offering of 26,833,334 of our common shares, which included the exercise in full of the underwriters' option to purchase additional shares, at the price of $7.50 per share. The net proceeds raised in the offering, after deducting underwriting discounts and expenses of the offering payable by us, were approximately $188.7 million. We intend to use the net proceeds received from the offering for general corporate purposes.
Note Purchase Agreement
In April 2025, we received $250.0 million in gross proceeds from the sale of senior secured notes under our Note Purchase Agreement. Pursuant to the Note Purchase Agreement, the Purchasers also agreed to purchase additional senior secured notes from the Issuer, at the Company's option and in up to three purchases on or before June 30, 2026 for an aggregate purchase price of $150.0 million, subject to the satisfaction of certain conditions, including the receipt of approval from the FDA for troriluzole. The Issuer may also sell to the Purchasers, at the Issuer's option and subject to the approval of each Purchaser agreeing to participate therein, in its sole discretion, additional notes in up to four purchases
for an aggregate purchase price of $200.0 million, the proceeds of which may be used solely to fund permitted acquisitions and related costs and expenses.
In the event that by the reporting deadline of March 2, 2026, our audited financial statements for the year ended December 31, 2025 or any year thereafter for the term of the agreement, are subject to any qualification, emphasis of matter or statement as to "going concern" or scope of audit, subject to certain exceptions, we would be in breach of our financial statement delivery covenant under the Note Purchase Agreement. In such event, if such requirement was not amended or waived by the Purchasers, the Purchasers could have the right to exercise their remedies under the Note Purchase Agreement, which could include, but not be limited to, declaring an event of default and accelerating payment of outstanding amounts thereunder (which amounted to $250.0 million as of December 31, 2025), plus a required premium.
Refer to Note 6, "Notes Payable", to the accompanying consolidated financial statements included in this Form 10-K for further discussion of the Note Purchase Agreement.
2024 Public Offerings
On April 22, 2024, we closed an underwritten public offering of 6,451,220 of our common shares, which included the exercise in full of the underwriters' option to purchase additional shares, at the price of $41.00 per share. The net proceeds raised in the offering, after deducting underwriting discounts and expenses of the offering payable by us, were approximately $247.8 million. We used the net proceeds received from the offering for general corporate purposes.
On October 2, 2024, we closed an underwritten public offering of 6,052,631 of our common shares, which included the exercise in full of the underwriters' option to purchase additional shares, at a price of $47.50 per share. The net proceeds raised in the offering, after deducting underwriting discounts and expenses of the offering payable by us, were approximately $269.9 million. We used the net proceeds received from the offering for general corporate purposes.
Equity Distribution Agreement
In October 2023, we entered into an equity distribution agreement pursuant to which we may offer and sell common shares having an aggregate offering price of up to $150.0 million from time to time through or to the sales agent, acting as our agent or principal (the "Equity Distribution Agreement"). Sales of our common shares, if any, will be made in sales deemed to be "at-the-market offerings". The sales agent is not required to sell any specific amount of securities but will act as our sales agent using commercially reasonable efforts consistent with its normal trading and sales practices, on mutually agreed terms between the sales agent and us. We currently plan to use the net proceeds from any at-the-market offerings of our common shares for general corporate purposes.
In August 2024, we entered into an Amendment to the Equity Distribution Agreement pursuant to which we may offer and sell common shares having an aggregate offering price of up to $450.0 million from time to time through or to the sales agent, acting as its agent or principal.
As of December 31, 2025, we have issued and sold 4,248,588 common shares under the Equity Distribution Agreement, as amended, for total net proceeds of approximately $146.3 million. As of December 31, 2025, additional common shares having an aggregate offering price of up to $300.0 million remain available to be issued.
Subsequent to December 31, 2025, we issued and sold an additional 17,164,940 common shares for net proceeds of $178.9 million. As of March 2, 2026, the date of this report, we have issued and sold 21,413,528 common shares under the Equity Distribution Agreement, as amended, for total net proceeds of approximately $325.1 million. As of March 2, 2026, additional common shares having an aggregate offering price of up to $118.7 million remain available to be issued.
Knopp Amendment
In May 2024, we entered into the Knopp Amendment which reduced our milestone payments by $867.5 million and replaced the high single digit to low teens royalty payment obligations with a flat royalty payment in the mid-single digits for our Kv7 programs. As consideration, we agreed to issue to Knopp the 2024 Additional Consideration and 2025 Additional Consideration, both non-cash common share payments, as well as agreed to one-time cash true-ups for both the 2024 Additional Consideration and 2025 Additional Consideration.
On May 30, 2024, we issued 1,872,874 common shares valued at $66.0 million to Knopp to settle the forward contract liability related to the 2024 Additional Consideration and recognized a non-cash gain of $9.2 million on settlement. In addition, the 2024 Additional Consideration True-up was considered settled as of December 2024, with no cash payment due upon expiration. The Company recognized a gain related to the 2024 Additional Consideration True-Up of $15.5 million.
On June 25, 2025, we issued an additional 3,588,688 shares valued at $51.4 million to Knopp to settle the forward contract liability related to the 2025 Additional Consideration and recognized a non-cash gain of $23.6 million on
settlement. In December 2025, the 2025 Additional Consideration True-up was considered settled, and an additional cash payment of $42.7 million was owed to Knopp and was subsequently paid in January 2026.
Knopp Warrant
As further consideration for the revisions to the success-based payment and royalty payment obligations in the Knopp Amendment, we issued to Knopp a warrant to purchase 294,195 of our common shares with a purchase price of $67.98, subject to certain specified development milestones and the Company achieving a specified market capitalization. In December 2025, Knopp elected to surrender the warrants to the Company for cancellation.
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 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;
•make required milestone, royalty, or other payments under new or existing contractual agreements;
•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;
•establish and support our sales, marketing and distribution infrastructure to commercialize any future product candidates for which we may obtain marketing approval; and
•hire additional clinical, medical, commercial, and development personnel.
We expect that our cash, cash equivalents and marketable securities, as of the date of this Annual Report on Form 10-K, will be sufficient to fund operating and financial commitments, and other cash requirements for at least one year after the issuance date of these financial statements.
To execute our business plans, we will require funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales or royalties, if ever, we expect to finance our operations through the sale of public or private equity, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. We 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 our shareholders. If we are unable to obtain funding, we could be forced to delay, reduce or eliminate some or all of our research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect our business prospects, or we may be unable to continue operations.
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 our 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 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;
•the extent to which we acquire or in-license other product candidates and technologies;
•the costs associated with milestone, royalty, or other payments under new or existing contractual agreements;
•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.
Future Cash Requirements
Contractual Obligations
The following table summarizes estimated material contractual obligations as of December 31, 2025:
| Payments Due by Period | ||||||||||||||||||||||||||||||||
| In thousands | Total | 2026 |
2027-2028
|
2029-2030
|
Thereafter
|
|||||||||||||||||||||||||||
|
Operating lease liabilities(1)
|
$ | 63,075 | $ | 9,138 | $ | 16,740 | $ | 14,103 | $ | 23,094 | ||||||||||||||||||||||
|
Purchase obligations:
|
||||||||||||||||||||||||||||||||
|
Research commitments(2)
|
20,784 | 20,784 | - | - | - | |||||||||||||||||||||||||||
| Total | $ | 83,859 | $ | 29,922 | $ | 16,740 | $ | 14,103 | $ | 23,094 | ||||||||||||||||||||||
(1) Refer to Note 12, "Commitments and Contingencies," to the Consolidated Financial Statements included in this 10-K for additional information on future minimum rental commitments under non-cancelable operating leases.
(2) Research commitments are primarily CRO agreements that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. For obligations with cancellation provisions, the amounts included in the preceding table are limited to the non-cancelable portion of the agreement terms or the minimum cancellation fee. In addition to the amounts above, as of December 31, 2025, the Company had remaining maximum research commitments of approximately $1,610, which are variable based on number of trial participants and contingent upon the achievement of certain milestones of the clinical trials covered under the agreements. Since the achievement of these milestones is uncertain and the timing unpredictable, the Company did not include the additional research commitments in the table above. If all related milestones are achieved, the Company expects these amounts to be paid over approximately one year.
In addition to the contractual obligations in the table above, under various agreements with third-party licensors, collaborators, and creditors, we have agreed to make milestone, royalty, and other payments. We have not included any contingent payment obligations, such as milestones, royalties, or other payments, or potential payments under the NPA in the table above as the amount, timing and likelihood of such payments are not known. For additional details on potential payments under the NPA and contingent milestone and royalty payments, see Note 6, "Notes Payable", Note 11, "License, Acquisitions and Other Agreements", and Note 12, "Commitments and Contingencies", to the Consolidated Financial Statements.
Critical Accounting Policies and Significant Judgments and Estimates
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). The preparation of our consolidated financial statements and related disclosures 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 consolidated 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.
While our significant accounting policies are described in more detail in Note 2, "Summary of Significant Accounting Policies," in the notes to our financial statements appearing at the end of this Annual Report, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
Accrued Research and Development Expenses
As part of the process of preparing the consolidated financial statements, we are required to estimate accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on its behalf and estimating the level of service performed and the associated cost incurred for the service when it has not yet been invoiced or otherwise notified of actual costs. The majority of our service providers invoice in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advance payments. We make estimates of our accrued expenses as of each balance sheet date in the consolidated financial statements based on facts and circumstances known to us at that time. We confirm the accuracy of these estimates with the service providers and make adjustments if necessary. Examples of estimated accrued research and development expenses include fees paid to:
•vendors, including central laboratories, in connection with preclinical development activities;
•CROs and investigative sites in connection with preclinical and clinical studies; and
•CMOs in connection with drug substance and drug product formulation of preclinical and clinical trial materials.
Valuation of Forward Contract and Derivative Liabilities
We have accounted for certain consideration agreed to in connection with the Knopp Amendment as forward contracts and derivative liabilities. The fair value of these liabilities have been determined based on Monte Carlo simulations of Biohaven's share price, which requires judgment and assumptions on the volatility of our share price, discounted to present value using a risk-free rate plus Biohaven specific credit risk as they are payable in either cash or a variable number of shares.
Valuation of Note Purchase Agreement
In April 2025, we entered into a Note Purchase Agreement (the "NPA") whereby the Purchasers may purchase up to $600.0 million of our senior secured notes, $250.0 million of which were issued and sold in the second quarter of 2025, $150.0 million may be issued and sold at our option contingent upon FDA approval of troriluzole, and subject to the satisfaction of certain additional conditions, $200.0 million may be issued and sold upon the mutual agreement of the parties for permitted strategic acquisitions and related costs and expenses. See Note 6, "Notes Payable," and Note 4, "Fair Value of Financial Assets and Liabilities," to the notes to our financial statements appearing elsewhere in this Annual Report.
We assessed the terms and features of the NPA and determined that we are eligible to elect the fair value option under ASC 825, "Financial Instruments." The NPA contains various embedded features and the election of the fair value option allows us to bypass analysis of potential embedded derivatives and further analysis of bifurcation of any recognized financial liabilities. Under the fair value option, the financial liability, which is recorded as Notes payable on the consolidated balance sheet, is initially measured at its fair value on the issuance date and subsequently remeasured at estimated fair value on a recurring basis at each reporting date. Subsequent changes in fair value, excluding the impact of the change in fair value attributable to instrument-specific credit risk, are separately presented as a component of other income (expense), net in the consolidated statements of operations. The portion of the fair value adjustment attributed to a change in the instrument-specific credit risk is recognized and separately presented as a component of other comprehensive income (loss). The portion of total changes in fair value attributable to changes in instrument-specific credit risk are determined through specific measurement of periodic changes in the discount rate assumption exclusive of base market changes and are presented as a component of comprehensive income (loss) in the accompanying consolidated statements of comprehensive loss.
As we elected to account for the NPA under the fair value option, debt issuance costs, which were not material, were immediately expensed within general and administrative expense in the consolidated statements of operations. Additionally, we have elected not to present interest expense separately from changes in fair value and therefore will not separately present interest expense associated with the Note Purchase Agreement.
The fair value of the NPA represents the present value of estimated future payments under the agreement. The fair value of the NPA is calculated using a scenario-based discounted cash flow model. The fair value measurement is based on significant Level 3 unobservable inputs such as management's assumptions on the probability and timing of regulatory approvals for troriluzole and other product candidates,probability and timing of an early redemption of all obligations under the agreement, and discount rate using a risk-free rate plus Biohaven-specific senior secured credit risk.
If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected. For additional information on our election of the fair value option for the Note Purchase Agreement, see Note 6, "Notes Payable," and
Note 4, "Fair Value of Financial Assets and Liabilities," to the notes to our financial statements appearing elsewhere in this Annual Report.
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, "Summary of Significant Accounting Policies," to our consolidated financial statements appearing at the end of this Annual Report.
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