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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 June 30, 2021
OR
☐         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-38080
Biohaven Pharmaceutical Holding Company 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 class Trading Symbol Name of each exchange on which registered
Common Shares, no par value BHVN New 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 ☐
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 7(a)(2)(B) of the Securities 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 August 5, 2021, the registrant had 65,401,228 common shares, without par value per share, outstanding.
1









Part I.     Financial Information

Item 1.    Condensed Consolidated Financial Statements (Unaudited)

Index to Condensed Consolidated Financial Statements (Unaudited)
Page
Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020
2
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2021 and 2020
3
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020
4
Notes to Condensed Consolidated Financial Statements
5

1
BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share amounts)
June 30, 2021 December 31, 2020
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 306,267  $ 132,149 
Marketable securities 59,840  223,185 
Trade receivable, net 168,637  120,111 
Inventory 64,058  39,563 
Prepaid expenses 48,871  76,682 
Other current assets 18,907  11,716 
Total current assets 666,580  603,406 
Property and equipment, net 10,885  9,340 
Equity method investment —  1,176 
Intangible assets, net 57,501  39,087 
Other assets 110,927  33,966 
Total assets $ 845,893  $ 686,975 
Liabilities and Shareholders’ Deficit
Current liabilities:
Accounts payable $ 60,002  $ 48,476 
Accrued expenses and other current liabilities 276,630  166,630 
Current portion of mandatorily redeemable preferred shares 62,500  62,500 
Total current liabilities 399,132  277,606 
Long-term debt 274,138  267,458 
Liability related to sale of future royalties, net 347,384  328,350 
Mandatorily redeemable preferred shares, net 133,091  111,591 
Derivative liability 15,890  14,190 
Obligation to perform R&D services 55,353  932 
Other long-term liabilities 17,501  19,037 
Total liabilities 1,242,489  1,019,164 
Commitments and contingencies (Note 15)
Contingently redeemable non-controlling interests 60,000  60,000 
Shareholders’ deficit:
Common shares, no par value; 200,000,000 shares authorized as of June 30, 2021 and December 31, 2020; 65,240,458 and 60,436,876 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively
 1,618,194  1,249,547 
Additional paid-in capital 142,405  98,938 
Accumulated other comprehensive income 280  314 
Accumulated deficit (2,214,756) (1,739,169)
Total shareholders’ deficit attributable to Biohaven Pharmaceutical Holding Company Ltd. (453,877) (390,370)
Non-controlling interests in consolidated subsidiaries (2,719) (1,819)
Total shareholders' deficit (456,596) (392,189)
Total liabilities and shareholders’ deficit $ 845,893  $ 686,975 

The accompanying notes are an integral part of these condensed consolidated financial statements.
2
BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
 
  Three Months Ended June 30, Six Months Ended June 30,
  2021 2020 2021 2020
Product revenue, net $ 92,933  $ 9,698  $ 136,756  $ 10,849 
Cost of goods sold 17,339  3,058  30,201  3,482 
Gross profit 75,594  6,640  106,555  7,367 
Operating expenses:
Research and development 77,428  42,425  184,539  98,495 
Selling, general and administrative 170,057  124,802  329,580  220,403 
Total operating expenses 247,485  167,227  514,119  318,898 
Loss from operations (171,891) (160,587) (407,564) (311,531)
Other income (expense):
Interest expense (7,836) (172) (15,567) (227)
Interest expense on mandatorily redeemable preferred shares (8,042) (6,993) (15,985) (12,554)
Interest expense on liability related to sale of future royalties (14,499) (11,570) (28,007) (19,995)
Change in fair value of derivatives (1,490) 650  (1,700) (5,131)
Gain (loss) from equity method investment —  (1,485) 5,261  (2,865)
Other expense, net (3,051) (119) (4,751) (216)
Total other income (expense), net (34,918) (19,689) (60,749) (40,988)
Loss before provision for income taxes (206,809) (180,276) (468,313) (352,519)
Provision for income taxes 4,350  658  8,174  1,352 
Net loss (211,159) (180,934) (476,487) (353,871)
Less: Net loss attributable to non-controlling interests (540) —  (900) — 
Net loss attributable to Biohaven Pharmaceutical Holding Company Ltd. $ (210,619) $ (180,934) $ (475,587) $ (353,871)
Net loss per share attributable to Biohaven Pharmaceutical Holding Company Ltd. — basic and diluted $ (3.23) $ (3.08) $ (7.48) $ (6.15)
Weighted average common shares outstanding—basic and diluted 65,112,179  58,742,329  63,584,932  57,577,384 
Comprehensive loss:
Net loss $ (211,159) $ (180,934) $ (476,487) $ (353,871)
Other comprehensive loss, net of tax (129) —  (34) — 
Comprehensive loss (211,288) (180,934) (476,521) (353,871)
Less: comprehensive loss attributable to non-controlling interests (540) —  (900) — 
Comprehensive loss attributable to Biohaven Pharmaceutical Holding Company Ltd. $ (210,748) $ (180,934) $ (475,621) $ (353,871)
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
  Six Months Ended June 30,
  2021 2020
Cash flows from operating activities:
Net loss $ (475,587) $ (353,871)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash share-based compensation expense 74,312  28,641 
Interest expense on mandatorily redeemable preferred shares 15,985  12,554 
Interest expense on liability related to sale of future royalties 28,007  19,995 
Interest expense paid-in-kind on long-term debt 5,649  — 
Issuance of common shares as payment for license and consulting agreements 4,243  — 
Change in fair value of derivatives 1,700  5,131 
(Gain) loss from equity method investment (5,261) 2,865 
Depreciation and amortization 11,278  1,551 
Change in obligation to perform R&D services (10,205) — 
Other non-cash items 2,093  150 
Changes in operating assets and liabilities:
Trade receivables, net (48,526) (44,796)
Inventories (19,046) (6,931)
Prepaid expenses 28,710  (36,626)
Other current assets (7,051) 2,246 
Other assets (79,832) 17 
Accounts payable 5,085  934 
Accrued expenses and other current liabilities 63,868  41,543 
Other long-term liabilities (28,138) 62 
Net cash used in operating activities (432,716) (326,535)
Cash flows from investing activities:
Sales and maturities of marketable securities 162,293  — 
Purchases of property and equipment (1,657) (1,381)
Payments for leasehold improvements —  (1,600)
Payments for intangible assets —  (21,500)
Net cash provided by (used in) investing activities 160,636  (24,481)
Cash flows from financing activities:
Proceeds from issuance of common shares 308,743  283,333 
Proceeds from obligation to perform R&D services 100,000  — 
Proceeds from the issuance of series B preferred shares 35,170  — 
Proceeds from exercise of share options and employee share purchase plan 8,643  14,355 
Payment of term loan commitment fee (3,750) — 
Payment of principal for finance leases (2,514) (37)
Payment of term loan (1,195) — 
Other 1,090  (500)
Net cash provided by financing activities 446,187  297,151 
Effect of exchange rate changes on cash, cash equivalents and restricted cash (189) — 
Net increase (decrease) in cash, cash equivalents and restricted cash 173,918  (53,865)
Cash, cash equivalents and restricted cash at beginning of period 134,231  317,727 
Cash, cash equivalents and restricted cash at end of period $ 308,149  $ 263,862 

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)

1.   Nature of the Business
Biohaven Pharmaceutical Holding Company Ltd. (“we,” “us”, "our," "Biohaven" or the “Company”) was incorporated in Tortola, British Virgin Islands in September 2013. We are a biopharmaceutical company with a portfolio of innovative product candidates targeting neurological diseases, including rare disorders. The Company's lead product, NURTEC™ ODT (rimegepant), was approved by the U.S. Food and Drug Administration ("FDA") on February 27, 2020, which became available by prescription in U.S. pharmacies on March 12, 2020, and was approved for the preventive treatment of migraine on May 27, 2021. NURTEC ODT is the first and only calcitonin gene-related peptide ("CGRP") receptor antagonist available in a quick-dissolve orally dissolving tablet ("ODT") formulation that is approved by the FDA for both the acute and preventive treatment of migraine in adults. Our other late-stage product candidates are based on multiple mechanisms — CGRP receptor antagonists, glutamate modulators and myeloperoxidase inhibition—which we believe have the potential to significantly alter existing treatment approaches across a diverse set of neurological indications with high unmet need in both large and orphan indications.
The Company is subject to risks and uncertainties common to companies in the biopharmaceutical industry, including, but not limited to, the risks associated with developing product candidates at each stage of non-clinical and clinical development; the challenges associated with gaining regulatory approval of such product candidates; the risks associated with commercializing pharmaceutical products for marketing and sale; the potential for development by third parties of new technological innovations that may compete with the Company’s products; the dependence on key personnel; the challenges of protecting proprietary technology; the need to comply with government regulations; the high costs of drug development; and the uncertainty of being able to secure additional capital when needed to fund operations.
Subsequent to its May 2017 initial public offering, the Company has primarily raised funds through sales of equity in private placements and public offerings, sale of revenue participation rights related to future royalties, debt financing and funds received for a research and development obligation. The Company has incurred recurring losses since its inception, had an accumulated deficit as of June 30, 2021, and expects to continue to generate operating losses during the commercial launch of NURTEC ODT for the acute and preventive treatment of migraine. To execute its business plans, the Company will continue to require additional funding to support its continuing operations and pursue its growth strategy.
As of August 9, 2021, the issuance date of our condensed consolidated financial statements, the Company expects that its cash, cash equivalents and marketable securities as of June 30, 2021, and the funds available from the Sixth Street Financing Agreement (see Note 14) and Series B Preferred Shares (see Note 8) will be sufficient to fund its current forecast for operating expenses, including commercialization of NURTEC ODT, financial commitments and other cash requirements for more than one year. The Company may need to raise additional capital until it is 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, the Company may delay, limit or reduce discretionary spending in areas related to research and development activities and other general and administrative expenses in order to fund its operating costs and working capital needs.

2.   Summary of Significant Accounting Policies
Our significant accounting policies are described in Note 2 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the "2020 Form 10-K"). Updates to our accounting policies, including impacts from the adoption of new accounting standards, are discussed below in this Note 2.
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its controlled subsidiaries after elimination of all significant intercompany accounts and transactions. Investments in companies in which the Company owns less than a 50% equity interest and where it exercises significant influence over the operating and financial policies of the investee are accounted for using the equity method of accounting.
The financial statements of our subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars using period-end exchange rates for assets and liabilities, historical exchange rates for shareholders' equity (deficit) and weighted average exchange rates for operating results. Translation gains and losses are included in accumulated other
5

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
2.   Summary of Significant Accounting Policies (Continued)


comprehensive income, net of tax, in shareholders' deficit. Foreign currency transaction gains and losses are included in other income (expense) in the condensed consolidated statement of operations and comprehensive loss.
Reclassifications
Certain items in the prior period’s condensed consolidated financial statements have been reclassified to conform to the current presentation.
Use of Estimates
The preparation of condensed consolidated 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 condensed consolidated financial statements and the reported amounts of income and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, revenue recognition, interest expense on liability related to sale of future royalties, valuation of Series B preferred shares forward contracts and income taxes. 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.
Inventory
The Company values its inventories at the lower-of-cost or net realizable value. The Company determines the cost of its inventories, which includes costs related to products held for sale in the ordinary course of business, products in process of production for such sale and items to be currently consumed in the production of goods to be available for sale, on a first-in, first-out (FIFO) basis. Due to the nature of the Company’s supply chain process, inventory that is owned by the Company, is physically stored at third-party warehouses, logistics providers and contract manufacturers. The Company classifies inventory costs as noncurrent when we expect to utilize the inventory beyond our normal operating cycle and includes these costs in other assets in our condensed consolidated balance sheets. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and writes down any excess and obsolete inventories to their net realizable value in the period in which the impairment is first identified. If they occur, such impairment charges are recorded as a component of cost of goods sold in the consolidated statements of operations.
The Company capitalizes inventory costs associated with products following regulatory approval when future commercialization is considered probable and the future economic benefit is expected to be realized. Products which may be used in clinical development programs are excluded from inventory and charged to research and development expense in the consolidated statement of operations as incurred. Prior to the initial date regulatory approval is received, costs related to the production of inventory are recorded as research and development expense on the Company’s consolidated statements of operations in the period incurred. Following FDA approval of NURTEC ODT on February 27, 2020, the Company subsequently began capitalizing costs related to inventory manufacturing.
Acquisitions
Our condensed consolidated financial statements include the operations of acquired businesses after the completion of the acquisitions. We account for acquired businesses using the acquisition method of accounting, which requires, among other things, that most assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date and that the fair value of acquired In-Process Research and Development ("IPR&D") be recorded on the balance sheet. Transaction costs are expensed as incurred. Any excess of the consideration transferred over the assigned values of the net assets acquired is recorded as goodwill. Contingent consideration in a business acquisition is included as part of the consideration transferred and is recognized at fair value as of the acquisition date. Fair value is generally estimated by using a probability-weighted discounted cash flow approach.
Acquired In-Process Research and Development
IPR&D that the Company acquires in conjunction with the acquisition of a business represents the fair value assigned to incomplete research projects which, at the time of acquisition, have not reached technological feasibility. The amounts are capitalized and are accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or
6

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
2.   Summary of Significant Accounting Policies (Continued)


abandonment of the projects. Upon successful completion of each project, the Company will make a determination as 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&D 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.
Obligation to Perform Research and Development Services
The Company accounts for obligations to perform Research and Development ("R&D") services by recording the consideration received as a liability, which then is recognized in the condensed consolidated statement of operations and comprehensive loss as an offset to R&D expense using the percentage completion method. The percentage complete is determined based on incurred R&D costs as a percent of the total forecasted costs of the contractual R&D commitment.
Unaudited Interim Condensed Consolidated Financial Information
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. The accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The accompanying year-end condensed consolidated 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 consolidated financial statements have been prepared on the same basis as the audited annual consolidated 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 June 30, 2021 and the results of its operations for the three and six months ended June 30, 2021 and 2020 and its cash flows for the six months ended June 30, 2021 and 2020. The results for the three and six months ended June 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods or any future year or period.  The financial information included herein should be read in conjunction with the financial statements and notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.
Recently Adopted Accounting Pronouncements
Effective January 1, 2021, the Company adopted ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The adoption of ASU 2019-12 did not have a material impact on the Company's condensed consolidated financial statements.
Future Adoption of New Accounting Pronouncements
In August 2020 the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The update addresses issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. The amendments in ASU 2020-06 are effective for fiscal years beginning after December 15, 2021, with early adoption permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Adoption of the standard requires changes to be made through either a modified retrospective method of transition or a fully retrospective method. In applying the modified retrospective method, the updated guidance is applied to transactions outstanding as of the beginning of the fiscal year in which the amendments are adopted. The Company is currently evaluating the impact that the adoption of ASU 2020-06 will have on its condensed consolidated financial statements.
In January 2021 the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, providing temporary guidance to ease the burden in accounting for reference rate reform primarily resulting from the discontinuation of LIBOR, which is currently expected to occur in mid-2023 for legacy contracts. The amendments in 2021-01 are elective immediately and apply to all entities that have contracts, hedging
7

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
2.   Summary of Significant Accounting Policies (Continued)


relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. The Company is currently evaluating the impact that the adoption of ASU 2021-01 will have on its condensed consolidated financial statements.
In May 2021 the FASB issued 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 Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the 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 guidance on the recognition 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, in the same manner as if cash had been paid as consideration. The guidance is applied prospectively and is effective for all entities for fiscal years beginning after 15 December 2021, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2021-04 will have on the condensed consolidated financial statements. The effect will largely depend on the terms of written call options or financings issued or modified in the future.

3. Marketable Securities
The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of available-for-sale debt securities by type of security at June 30, 2021 was as follows:
Amortized Cost Allowance for Credit Losses Net Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
Corporate bonds
U.S. $ 46,172  $ —  $ 46,172  $ 35  $ (2) $ 46,205 
Foreign 13,637  —  13,637  —  (2) 13,635 
Total $ 59,809  $ —  $ 59,809  $ 35  $ (4) $ 59,840 

The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of available-for-sale debt securities by type of security at December 31, 2020 was as follows:
Amortized Cost Allowance for Credit Losses Net Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
Corporate bonds
U.S. $ 185,989  $ —  $ 185,989  $ 1  $ (106) $ 185,884 
Foreign 37,321  —  37,321  1  (21) 37,301 
Total $ 223,310  $ —  $ 223,310  $ 2  $ (127) $ 223,185 

The Company had 9 and 47 available-for-sale debt securities in an unrealized loss position, with an aggregate fair value of $31,387 and $212,378, as of June 30, 2021 and December 31, 2020, respectively. As of June 30, 2021, 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
8

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
3.  Marketable Securities (Continued)

prior to the anticipated recovery of their amortized cost basis. We did not have any investments in a continuous unrealized loss position for more than twelve months as of June 30, 2021 and December 31, 2020.
The fair values of debt securities available-for-sale by classification in the condensed consolidated balance sheets were as follows:
June 30, 2021 December 31, 2020
Marketable securities $ 59,840  $ 223,185 

The net amortized cost and fair value of debt securities available-for-sale at June 30, 2021 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.
Net Amortized Cost Fair Value
Due to mature:
Less than one year $ 59,809  $ 59,840 

Net Investment Income
Sources of net investment income included in other income (expense) in the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2021 were as follows:
Three Months Ended June 30, 2021 Six Months Ended June 30, 2021
Gross investment income from debt securities available-for-sale $ 89  $ 161 
Investment expenses (24) (76)
Net investment income (excluding net realized capital gains or losses) 65  85 
Net realized capital gains (losses) —  19 
Net investment income $ 65  $ 104 

The Company had no net investment income during the three and six months ended June 30, 2020.
We utilize the specific identification method in computing realized gains and losses. The Company had no maturities or sales of available-for-sale debt securities or resulting realized gains and losses for the three and six months ended June 30, 2020.

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
9

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY 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)
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.
For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see (Note 4) “Fair Value of Financial Assets and Liabilities” in the 2020 Form 10-K. Financial assets and liabilities measured at fair value on a recurring basis on the condensed consolidated balance sheet at June 30, 2021 and December 31, 2020 were as follows:
Fair Value Measurement as of June 30, 2021 Using:
Balance Sheet Classification Type of Instrument Level 1 Level 2 Level 3 Total
Assets:
Cash equivalents Money market funds $ 145,462  $ —  $ —  $ 145,462 
Marketable securities U.S. corporate bonds —  46,205  —  46,205 
Marketable securities Foreign corporate bonds —  13,635  —  13,635 
Total assets $ 145,462  $ 59,840  $ —  $ 205,302 
Liabilities:
Series B preferred shares forward contracts $ —  $ —  $ 15,890  $ 15,890 
Contingent value right liability —  —  1,457  1,457 
Total liabilities $ —  $ —  $ 17,347  $ 17,347 

Fair Value Measurement as of December 31, 2020 Using:
Balance Sheet Classification Type of Instrument Level 1 Level 2 Level 3 Total
Assets:
Cash equivalents Money market funds $ 6,858  $ —  $ —  $ 6,858 
Marketable securities U.S. corporate bonds —  185,884  —  185,884 
Marketable securities Foreign corporate bonds —  37,301  —  37,301 
Total assets $ 6,858  $ 223,185  $ —  $ 230,043 
Liabilities:
Series B preferred shares forward contracts $ —  $ —  $ 14,190  $ 14,190 
Total liabilities $ —  $ —  $ 14,190  $ 14,190 

There were no securities transferred between Level 1, 2 and 3 during the six months ended June 30, 2021 and 2020.
10

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY 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)
•Series B Preferred Shares Forward Contracts

The following table provides a roll forward of the aggregate fair value of the Company's Series B Preferred Shares Forward Contracts for which fair value is determined by Level 3 inputs for the six months ended June 30, 2021:
Forward Contracts
Balance at December 31, 2020 $ 14,190 
Change in fair value 1,700 
Balance at June 30, 2021 $ 15,890 

The Company had no Series B Preferred Shares Forward Contracts for the six months ended June 30, 2020.

•Contingent Value Right Liability
On January 4, 2021, the Company acquired Kleo Pharmaceuticals, Inc. (“Kleo”) (see Note 6). Included in the purchase consideration transferred was 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 the contingent value right is approximately $17,300, and the fair value of the contingent value right was $1,457 as of the acquisition date. The Company recorded the contingent value right in other long-term liabilities on the condensed consolidated balance sheets.

The fair value of the contingent value right was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The Company used a discounted cash flow approach to value the contingent value right liability. As inputs into the valuation, the Company considered the probability of FDA approval within the 30 month period, which we estimated at approximately 10%, the amount of the payment, and a discount rate of approximately 7% determined using an implied credit spread adjusted based on companies with similar credit risk.

There was no material change in fair value of the contingent value right liability during the three and six months ended June 30, 2021.
•Series A Preferred Shares Derivative Liability
The Company had no Series A preferred shares derivative liability for the six months ended June 30, 2021.

The following table provides a roll forward of the aggregate fair value of the Company’s Series A preferred shares derivative liability for which fair value is determined by Level 3 inputs for the six months ended June 30, 2020:
Series A Derivative
Liability
Balance at December 31, 2019 $ 37,690 
Change in fair value of derivative liability 5,131 
Partial settlement of derivative liability (42,821)
Balance at June 30, 2020 $ — 


11

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
5. Balance Sheet Components
Restricted Cash
Restricted cash included in other current assets in the condensed consolidated balance sheets is primarily employee contributions to the Company's employee share purchase plan held for future purchases of the Company's outstanding shares.
Restricted cash included in other assets in the condensed consolidated balance sheets represents collateral held by a bank for a letter of credit ("LOC") issued in connection with the leased office space in Yardley, Pennsylvania. The following represents a reconciliation of cash and cash equivalents in the condensed consolidated balance sheets to total cash, cash equivalents and restricted cash as of June 30, 2021 and December 31, 2020, respectively, in the condensed consolidated statement of cash flows:
June 30, 2021 December 31, 2020
Cash and cash equivalents $ 306,267  $ 132,149 
Restricted cash (included in other current assets) 1,132  1,082 
Restricted cash (included in other assets) 750  1,000 
Cash, cash equivalents and restricted cash in the statement of cash flows $ 308,149  $ 134,231 
Trade Receivables, Net
The Company’s trade accounts receivable consists of amounts due from pharmacy wholesalers in the U.S. (collectively, its "Customers") related to sales of NURTEC ODT and have standard payment terms. For certain Customers, the trade accounts receivable for the Customer is net of distribution service fees, prompt pay discounts and other adjustments. The Company monitors the financial performance and creditworthiness of its Customers so that it can properly assess and respond to changes in their credit profile. The Company reserves against trade accounts receivable for estimated losses that may arise from a Customer’s inability to pay and any amounts determined to be uncollectible are written off against the reserve when it is probable that the receivable will not be collected. The allowance for doubtful accounts, including reserve amounts for estimated credit losses, was immaterial as of June 30, 2021 and December 31, 2020.
Inventories
Inventories consisted of the following:
As of June 30, 2021 As of December 31, 2020
Raw materials $ —  $ 931 
Work-in-process 94,324  33,266 
Finished goods 3,462  5,366 
Total inventories $ 97,786  $ 39,563 
Less noncurrent inventories(1)
 33,728  — 
Total inventories classified as current $ 64,058  $ 39,563 
(1) Included in other assets on the condensed consolidated balance sheets. There are no recoverability issues for these amounts.
12

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
5. Balance Sheet Components (Continued)
Prepaid Expenses
Prepaid expenses consisted of the following:
As of June 30, 2021 As of December 31, 2020
Prepaid clinical trial costs $ 24,108  $ 21,173 
Prepaid manufacturing 2,919  36,040 
Prepaid commercial costs 19,326  16,448 
Other prepaid expenses 2,518  3,021 
 Prepaid expenses $ 48,871  $ 76,682 
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
As of June 30, 2021 As of December 31, 2020
Accrued development milestones $ 500  $ 667 
Accrued employee compensation and benefits 26,964  29,447 
Accrued clinical trial costs 29,972  19,887 
Accrued commercialization and other professional fees 27,273  6,336 
Accrued sales discounts and allowances 104,668  73,155 
Current obligation to perform R&D services 37,466  846 
Other accrued expenses and other current liabilities 49,787  36,292 
 Accrued expenses and other current liabilities $ 276,630  $ 166,630 

6.   Business Acquisition
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 consisted of the issuance of a total of 115,836 common shares of the Company 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 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 is approximately $17,300, and the fair value of the contingent value right is $1,457 as of the acquisition date. The transaction also provides for approximately $950 of cash holdbacks to provide for potential indemnification claims and other reserves. Any holdback amounts remaining after the holdback periods will be released to the Kleo stockholders in the form of cash consideration.
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 of $5,261 for the six months ended June 30, 2021 on the condensed consolidated statement 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 development; debt assumed of $1,577; and goodwill of $1,390.
13

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
6.   Business Acquisition (Continued)


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 Company filed a registration statement permitting Kleo stockholders to offer and sell the common shares of the Company issued in the transaction.

7.   Liability Related to Sale of Future Royalties, net
2018 RPI Funding Agreement
In June 2018, the Company entered into a funding agreement (the "2018 RPI Funding Agreement") to sell tiered, sales-based royalty rights on global net sales of pharmaceutical products containing the compounds rimegepant or zavegepant (previously known as BHV-3500 and vazegepant) and certain derivative compounds thereof ("Products") to RPI, a Delaware statutory trust. The Company issued to RPI the right to receive certain revenue participation payments, subject to certain reductions, based on the future global net sales of the Products for each calendar quarter during the royalty term contemplated by the 2018 RPI Funding Agreement, in exchange for $100,000 in cash.
Concurrent with the 2018 RPI Funding Agreement, the Company entered into a common stock purchase agreement (the "Purchase Agreement") with RPI. Pursuant to the Purchase Agreement, the Company sold 1,111,111 common shares of the Company to RPI at a price of $45.00 per share, for gross proceeds of $50,000.
The Company concluded that there were two units of account for the consideration received comprised of the liability related to sale of future royalties and the common shares. The Company allocated the $100,000 from the 2018 RPI Funding Agreement and $50,000 from the Purchase Agreement among the two units of account on a relative fair value basis at the time of the transaction. The Company allocated $106,047 in transaction consideration to the liability, and $43,953 to the common shares. The Company determined the fair value of the common shares based on the closing share price on the transaction date, adjusted for the trading restrictions. The transaction costs of $377 were allocated in proportion to the allocation of total consideration to the two units of account. The effective interest rate under the 2018 RPI Funding Agreement, including transaction costs, is approximately 27% as of June 30, 2021.
2020 RPI Funding Agreement
In August 2020, the Company entered into a funding agreement with RPI 2019 Intermediate Finance Trust (“RPI 2019 IFT”) providing for up to $250,000 of funding in exchange for rights to participation payments based on global net sales of products containing zavegepant and rimegepant and certain payments based on success-based milestones relating to zavegepant (the "2020 RPI Funding Agreement"). Under the 2020 RPI Funding Agreement, RPI 2019 IFT will be entitled to receive tiered, sales based participation rights up to 3.0% of future global net sales of products containing zavegepant, 0.4% of future global net sales of products containing rimegepant, and payments tied to success-based milestones as described below. Pursuant to the 2020 RPI Funding Agreement, the Company received $150,000 on the transaction date in August 2020 and $100,000 in March 2021 upon the commencement of the oral zavegepant Phase 3 clinical program.
If at any time during the 180 days following the closing of the 2020 RPI Funding Agreement, the Company enters into a definitive agreement to consummate a Change of Control (as defined in the Company's articles and memorandum of association), the Company will have the option to repurchase the participation rights and milestone payment rights for a purchase price of 2.0x of the amount received under the agreement at that date, contingent upon the closing of a Change of Control (the "Buy-Back Option").
The success-based milestone payments range from 0.6x to 2.95x of the funded amount depending on the number of regulatory approvals achieved for zavegepant (including 1.9x for the first zavegepant migraine regulatory approval) and would be paid over a 10-year period. If the Company consummates a Change of Control, and the Buy-Back Option has not previously been exercised, RPI 2019 IFT has the option to accelerate each unpaid milestone payment which has or thereafter occurs.
The Company concluded that there were two units of account for the $150,000 in initial consideration received, which comprised of a liability related to sale of future royalties for products containing rimegepant and a research and development arrangement with RPI 2019 IFT for zavegepant. The Company allocated the $150,000 from the 2020 RPI Funding Agreement among the two units of account based on the present value of probability adjusted net sales at the time of the transaction. The Company allocated $147,876 in transaction consideration to the liability related to sale of future royalties and $2,124 to the
14

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
7.   Liability Related to Sale of Future Royalties, net (Continued)
obligation to perform contractual services in the condensed consolidated balance sheets. The transaction costs of $400 were allocated only to the liability related to sale of future royalties. The effective interest rate under the 2020 RPI Funding Agreement, including transaction costs, is approximately 6% as of June 30, 2021.
In March 2021, the Company received $100,000 from RPI 2019 IFT for the commencement of the oral zavegepant Phase 3 clinical program. The Company allocated the proceeds to obligation to perform R&D services liability in the condensed consolidated balance sheets.
Since there is a substantive and genuine transfer of risk to RPI 2019 IFT for the development of zavegepant, the $102,124 of consideration allocated to the development of zavegepant is being recognized by the Company as an obligation to perform contractual services and therefore is a reduction of research and development expenses as incurred. The reduction to research and development expenses related to the 2020 RPI Funding Agreement for the three and six months ended June 30, 2021 was $10,016 and $10,205.
The following table shows the activity within the liability related to sales of future royalties account for the six months ended June 30, 2021 and 2020, respectively, related to the 2018 and 2020 RPI Funding Agreements.
Six Months Ended June 30,
2021 2020
Liability related to sale of future royalties - beginning balance
 $ 335,282  $ 144,111 
Royalty revenues payable to RPI (3,419) (228)
Interest expense on liability related to sale of future royalties 28,007  19,995 
Liability related to sale of future royalties - ending balance
 $ 359,870  $ 163,878 

8.   Mandatorily Redeemable Preferred Shares, net
In April 2019, the Company sold 2,495 Series A preferred shares (the "Series A Preferred Shares") to RPI at a price of $50,100 per preferred share pursuant to a Series A preferred share purchase agreement (the "Preferred Share Agreement"). The gross proceeds from the transaction with RPI were $125,000, with $105,000 of the proceeds used to purchase a priority review voucher ("PRV") issued by the United States Secretary of Health and Human Services to potentially expedite the regulatory review of the new drug application ("NDA") for the ODT formulation of rimegepant and the remainder of the proceeds to be used for other general corporate purposes. Pursuant to the Preferred Share Agreement, the Company had the option to issue additional Series A Preferred Shares to RPI in up to three additional closings for an aggregate amount of $75,000. The Company was not obligated to issue any additional Series A Preferred Shares, subject to a fee up to $3,000 if not all of the Series A Preferred Shares were issued. In the third quarter of 2020, the Company determined it will not exercise the option to issue additional Series A Preferred Shares and accordingly recognized the full $3,000 fee in other expense in the condensed consolidated statements of operations and comprehensive loss.
The holders of the Company's outstanding Series A Preferred Shares will have the right to require redemption of the shares in certain circumstances. If a Change of Control, as defined in the Company's memorandum and article of association, occurs and the Series A Preferred Shares have not previously been redeemed, the Company must redeem the Series A Preferred Shares for two times (2x) the original purchase price of the Series A Preferred Shares payable in a lump sum at the closing of the Change of Control or in equal quarterly installments following the closing of the Change of Control through December 31, 2024.
The Company may redeem the Series A Preferred Shares at its option at any time for two times (2x) the original purchase price, which redemption price may be paid in a lump sum or in equal quarterly installments through December 31, 2024.
In the event that the Company defaults on any obligation to redeem Series A Preferred Shares when required, the redemption amount shall accrue interest at the rate of eighteen percent (18%) per annum. If any such default continues for at least one year, the holders of such shares shall be entitled to convert, subject to certain limitations, such Series A Preferred Shares into common shares, with no waiver of their redemption rights.
15

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
8.   Mandatorily Redeemable Preferred Shares, net (Continued)

The Company is required to redeem the Series A Preferred Shares for two times (2x) the original purchase price, payable beginning March 31, 2021 in equal quarterly installments through December 31, 2024. Accordingly, the Company has concluded the Series A Preferred Shares are mandatorily redeemable instruments and classified as a liability. The Company initially measured the liability at fair value, and will subsequently accrete the carrying value to the redemption value through interest expense using the effective interest rate method. The effective interest rate under the Preferred Share Agreement, including transaction costs, was determined to be approximately 20% as of June 30, 2021. The Company recognized $7,677 and $6,993 in interest expense for the three months ended June 30, 2021 and June 30, 2020, respectively. The Company recognized $15,620 and $12,554 in interest expense for the six months ended June 30, 2021 and June 30, 2020, respectively. The Company had 2,183 and 2,495 Series A Preferred Shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.
The following table shows the activity within the Series A preferred share liability for the six months ended June 30, 2021 and 2020, respectively:
Carrying Value
Gross balance at December 31, 2020 $ 174,264 
Interest expense recognized, excluding transaction cost amortization 15,599 
Redemption of Series A preferred shares (31,250)
Gross balance at June 30, 2021 $ 158,613 
Less: unamortized transaction costs (152)
Net balance at June 30, 2021 $ 158,461 
Gross balance at December 31, 2019 $ 103,864 
Partial settlement of derivative liability 42,821 
Interest expense recognized, excluding transaction cost amortization 12,532 
Gross balance at June 30, 2020 $ 159,217 
Less: unamortized transaction costs (196)
Net balance at June 30, 2020 $ 159,021 

Certain scenarios as described in the Preferred Share Agreement were determined by the Company to result in a derivative liability. The with-and-without valuation method was used to determine the fair value of the embedded derivatives within the agreement. As inputs into the valuation, the Company considered the type and probability of occurrence of certain events, the amount of the payments, the expected timing of certain events, and a risk-adjusted discount rate. In accordance with ASC 815, Derivatives and Hedging, the fair value of the derivative was recorded on the balance sheet as a Series A preferred shares derivative liability with changes in fair value recorded in other income (expense) in the condensed consolidated statements of operations and comprehensive loss (see Note 4 for details on the fair value measurement).
Upon the FDA's approval of NURTEC ODT the Company remeasured the derivative using the inputs noted above. In the first quarter of 2020, the Company partially settled the Series A preferred shares derivative liability associated with this approval of $42,821, which modified the timing of the payment obligation related to the redeemable preferred share liability.
On August 7, 2020, the Company entered into the RPI Series B Preferred Share Agreement, pursuant to which RPI agreed to invest in the Company through the purchase of up to 3,992 Series B Preferred Shares at a price of $50,100 per share. The shares will be issued in quarterly increments from March 31, 2021 to December 31, 2024. Upon issuance of the Series B Preferred Shares, they will qualify as mandatorily redeemable instruments and be classified as a mandatorily redeemable preferred shares liability on the condensed consolidated balance sheets. The Company will then measure the liability at fair value, and subsequently accrete the carrying value to the redemption value through interest expense using the effective interest rate method. The effective interest rate under the Series B Preferred Share Agreement was determined to be approximately 8%,
16

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
8.   Mandatorily Redeemable Preferred Shares, net (Continued)
and the Company recognized $365 in interest expense for the three and six months ended June 30, 2021. The Company had 702 and no Series B preferred shares issued and outstanding, as of June 30, 2021 and December 31, 2020, respectively.
The following table shows the activity within the Series B preferred share liability for the six months ended June 30, 2021:
Carrying Value
Balance at December 31, 2020 $ — 
Interest expense recognized 365 
Issuance of Series B preferred shares 36,765 
Balance at June 30, 2021 $ 37,130 

9.   Shareholders' Equity (Deficit)
Changes in shareholders’ deficit for the three and six months ended June 30, 2021 were as follows:
Common Shares
Shares Amount Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income Biohaven Shareholders' Equity (Deficit) Non-controlling Interests Total Shareholders' Equity (Deficit)
Balances as of December 31, 2020 60,436,876  $ 1,249,547  $ 98,938  $ (1,739,169) $ 314  $ (390,370) $ (1,819) $ (392,189)
Issuance of common shares as part of acquisition 115,836  10,673  —  —  —  10,673  —  10,673 
Issuance of common shares as payment for license agreements 110,998  10,243  —  —  —  10,243  —  10,243 
Issuance of common shares, net of offering costs 4,037,204  308,243  —  —  —  308,243  —  308,243 
Issuance of common shares under equity incentive plan 365,554  25,315  (23,933) —  —  1,382  —  1,382 
Non-cash share-based compensation expense —  —  48,726  —  —  48,726  —  48,726 
Net loss —  —  —  (264,968) —  (264,968) (360) (265,328)
Other comprehensive income —  —  —  —  95  95  —  95 
Balances as of March 31, 2021 65,066,468  $ 1,604,021  $ 123,731  $ (2,004,137) $ 409  $ (275,976) $ (2,179) $ (278,155)
Issuance of common shares under equity incentive plan and employee share purchase plan 173,990  14,173  (6,912) —  —  7,261  —  7,261 
Non-cash share-based compensation expense —  —  25,586  —  —  25,586  —  25,586 
Net loss —  —  —  (210,619) —  (210,619) (540) (211,159)
Other comprehensive loss —  —  —  —  (129) (129) —  (129)
Balances as of June 30, 2021 65,240,458  $ 1,618,194  $ 142,405  $ (2,214,756) $ 280  $ (453,877) $ (2,719) $ (456,596)

17

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
9.   Shareholders' Equity (Deficit) (Continued)
Changes in shareholders’ equity (deficit) for the three and six months ended June 30, 2020 were as follows:
Common Shares
Shares Amount Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income Biohaven Shareholders' Equity (Deficit) Non-controlling Interests Total Shareholders' Equity (Deficit)
Balance as of December 31, 2019 52,385,283  $ 881,426  $ 83,523  $ (972,373) $ —  $ (7,424) $ —  $ (7,424)
Issuance of common shares, net of offering costs 5,555,554  282,833  —  —  —  282,833  —  282,833 
Issuance of common shares under equity incentive plan 447,111  10,880  (8,273) —  —  2,607  —  2,607 
Non-cash share-based compensation expense —  —  16,879  —  —  16,879  —  16,879 
Net loss —  —  —  (172,937) —  (172,937) —  (172,937)
Balance as of March 31, 2020 58,387,948  $ 1,175,139  $ 92,129  $ (1,145,310) $ —  $ 121,958  $ —  $ 121,958 
Issuance of common shares under equity incentive plan 1,137,617  23,866  (12,118) —  —  11,748  —  11,748 
Non-cash share-based compensation expense —  —  11,762  —  —  11,762  —  11,762 
Net loss —  —  —  (180,934) —  (180,934) —  (180,934)
Balance as of June 30, 2020 59,525,565  $ 1,199,005  $ 91,773  $ (1,326,244) $ —  $ (35,466) $ —  $ (35,466)

Issuance of Common Shares for the March 2021 Offering
In March 2021, the Company issued and sold 2,686,409 common shares at a public offering price of $76.00 per share for net proceeds of approximately $199,500 after deducting underwriting discounts and commissions of approximately $4,167 and other offering expenses of approximately $500. In addition, in March 2021, the underwriter of the March follow-on offering exercised its option to purchase additional shares, and the Company issued and sold 402,961 common shares for net proceeds of approximately $30,000 after deducting underwriting discounts and commissions of approximately $625. Thus, the aggregate net proceeds to the Company from the follow-on offering, after deducting underwriting discounts and commissions and other offering costs, were approximately $229,500.
Acquisition of Kleo Pharmaceuticals, Inc.
On January 4, 2021, the Company acquired Kleo Pharmaceuticals, Inc. (Note 6). In the merger, each share of Kleo common stock issued and outstanding immediately prior to the effective time of the merger was converted into the right to receive approximately 0.007 of a common share of the Company, rounded up to the nearest whole share. Prior to the consummation of the merger, the Company owned approximately 41.9% of the outstanding shares of Kleo through its subsidiary Therapeutics, resulting in 115,836 common shares of the Company being issued to Kleo stockholders in the merger.
Yale MoDE Agreement
On January 1, 2021, the Company entered into a worldwide, exclusive license agreement for the development and commercialization of a novel Molecular Degrader of Extracellular Protein (MoDEs) platform based on ground-breaking research conducted in the laboratory of Professor David Spiegel at Yale University (Note 13). Under the agreement, the Company paid Yale University an upfront cash payment of $1,000 and 11,668 shares valued at $1,000, both of which were included in research and development expense in the condensed consolidated statements of operations and comprehensive loss.
Consulting Agreement with Moda Pharmaceuticals LLC
On January 1, 2021, the Company entered into a consulting services agreement with Moda Pharmaceuticals LLC to further the scientific and commercial advancement of technology, drug discovery platforms, product candidates and related intellectual property owned or controlled by the Company (Note 13). Under the agreement, the Company paid Moda an upfront cash payment of $2,700 and 37,836 shares valued at $3,243, both of which were included in research and development expense in the condensed consolidated statements of operations and comprehensive loss.
18

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
9.   Shareholders' Equity (Deficit) (Continued)
Equity Distribution Agreement
In December 2020, the Company entered into an equity distribution agreement with Goldman Sachs & Co. LLC, Piper Sandler & Co., SVB Leerink LLC, Canaccord Genuity LLC, Mizuho Securities USA LLC, Wedbush Securities Inc., and William Blair & Company, L.L.C., as our sales agents (the "Equity Distribution Agreement"). In accordance with the terms of the Equity Distribution Agreement, we may offer and sell common shares having an aggregate offering price of up to $400,000 from time to time through or to the sales agents, acting as our agents or principals. Sales of our common shares will be made in sales deemed to be “at the market offerings” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, or the Securities Act, in ordinary brokers’ transactions, to or through a market maker, on or through the New York Stock Exchange or any other market venue where the securities may be traded, in the over-the-counter market, in privately negotiated transactions, or through a combination of any such methods of sale. The sales agents may also sell our common shares by any other method permitted by law. The sales agents are not required to sell any specific amount of securities but will act as our sales agents using commercially reasonable efforts consistent with their normal trading and sales practices, on mutually agreed terms between the sales agents and us. The Company issued and sold no shares in the three months ended June 30, 2021, and 939,328 common shares for net proceeds of approximately $78,743 during the six months ended June 30, 2021.
Issuance of Series A Preferred Shares and Employee Share Options by Consolidated Subsidiary
In September 2020, the Company's Asia-Pacific Subsidiary, BioShin Limited, 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 contain both a call option by the Company and a put option held by the BioShin Investors. The call and put options have mirroring features that allow for the Company to buy, or the BioShin Investors to sell the preferred shares following a change of control of the Company at the greater of the fair market value of the BioShin preferred shares on execution of the options or a multiple of 2.5x to 3.5x dependent on when the change of control occurs, prior to an initial public offering of BioShin. Due to the contingently redeemable features, the Company has classified the BioShin Series A Preferred Shares in mezzanine equity since the redemption is out of the Company's control. In the event that a change of control becomes probable, the Company will accrete the carrying value of the BioShin Series A Preferred Shares to their redemption value.
In connection with the BioShin Series A Preferred Shares issuance, BioShin Limited executed the 2020 Equity Incentive Plan ("BioShin 2020 Equity Incentive Plan") and granted options under the BioShin 2020 Equity Incentive Plan to certain employees. The compensation expense 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 years) using the straight-line method. The Company is accounting for the expense being recognized over the requisite service period as non-controlling interest in shareholder's equity. The Company recognized $540 and $900 in non-controlling interest relating to the options for the three and six months ended June 30, 2021, respectively.
Artizan Biosciences Inc.
In December 2020, the Company entered into a Series A-2 Preferred Stock Purchase Agreement with Artizan Biosciences Inc. ("Artizan") (Note 13). Under the agreement, the Company paid Artizan 61,494 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.
Issuance of Common Shares for the January 2020 Offering
In January 2020, the Company issued and sold 4,830,917 common shares at a public offering price of $51.75 per share for net proceeds of approximately $245,877 after deducting underwriting discounts and commissions of approximately $3,623 and other offering expenses of approximately $500. In addition, in February 2020, the underwriter of the January follow-on offering exercised its option to purchase additional shares, and the Company issued and sold 724,637 common shares for net proceeds of approximately $36,956 after deducting underwriting discounts and commissions of approximately $543. Thus, the aggregate net proceeds to the Company from the follow-on offering, after deducting underwriting discounts and commissions and other offering costs, were approximately $282,833.

19

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
10. Accumulated Other Comprehensive Income (Loss)

Shareholders’ deficit included the following activity in accumulated other comprehensive income for the three and six months ended June 30, 2021:
Three Months Ended June 30, 2021 Six Months Ended June 30, 2021
Net unrealized investment gains (losses):
Beginning of period balance $ (43) $ (125)
Other comprehensive income(1)
 73  136 
Amounts reclassified from accumulated other comprehensive income(1)
 —  19 
Other comprehensive income 73  155 
End of period balance 30  30 
Foreign currency translation adjustments:
Beginning of period balance 452  439 
Other comprehensive loss(1)
 (202) (189)
End of period balance 250  250 
Total beginning of period accumulated other comprehensive income 409  314 
Total other comprehensive loss (129) (34)
Total end of period accumulated other comprehensive income $ 280  $ 280 
(1) There was no tax on other comprehensive income (loss) or amounts reclassified from accumulated other comprehensive income during the period
The Company had no accumulated other comprehensive income (loss) included in shareholders' deficit as of June 30, 2020.

11. Share-Based Compensation
Non-Cash Share-Based Compensation Expense
Non-cash share-based compensation 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. Non-cash share-based compensation expense, consisting of expense for stock options, Restricted Share Units ("RSUs") and Employee Share Purchase Plan ("ESPP"), was classified in the condensed consolidated statements of operations and comprehensive loss as follows:
Three months ended June 30, Six months ended June 30,
2021 2020 2021 2020
Research and development expenses $ 9,273  $ 6,426  $ 29,331  $ 12,677 
Selling, general and administrative expenses 16,313  5,336  44,981  15,964 
Total non-cash share-based compensation expense $ 25,586  $ 11,762  $ 74,312  $ 28,641 
Less: Share-based compensation expense attributable to non-controlling interests 540  —  900  — 
Share-based compensation expense attributable to Biohaven Pharmaceutical Holding Company Ltd. $ 25,046  $ 11,762  $ 73,412  $ 28,641 
20

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
11. Share-Based Compensation (Continued)
Stock Options
All stock option grants are awarded at fair value on the date of grant. The fair value of stock options is estimated using the Black-Scholes option pricing model and stock-based compensation is recognized on a straight-line basis over the requisite service period. Stock options granted generally become exercisable over a three-year or four-year period from the grant date. Stock options generally expire 10 years after the grant date.
The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company's common shares for those stock options that had exercise prices lower than the fair value of the Company's common shares at June 30, 2021.
As of June 30, 2021, the Company's unrecognized compensation expense related to unvested stock options totaled $76,622, which the Company expects to be recognized over a weighted-average period of 1.87 years. The Company expects approximately 3,167,723 of the unvested stock options to vest over the requisite service period.
The following table is a summary of the Company's stock option activity for the six months ended June 30, 2021:
Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value
Outstanding as of December 31, 2020 7,545,907  $28.21
Granted 1,252,530  $82.53
Exercised (153,847) $35.05
Forfeited (70,790) $55.98
Outstanding as of June 30, 2021 8,573,800  $35.78 6.92 $ 525,563 
Options exercisable as of June 30, 2021 5,406,077  $25.91 6.17 $ 384,734 
Vested and expected to vest as of June 30, 2021 8,573,800  $35.78 6.92 $ 525,563 

Restricted Share Units
The Company’s RSUs are considered nonvested share awards and require no payment from the employee. For each RSU, employees receive one common share at the end of the vesting period. The employee can elect to receive the one common share net of taxes or pay for taxes separately and receive the entire share. Compensation cost is recorded based on the market price of the Company’s common shares on the grant date and is recognized on a straight-line basis over the requisite service period.
As of June 30, 2021, there was $74,781 of total unrecognized compensation cost related to Company RSUs that are expected to vest. These costs are expected to be recognized over a weighted-average period of 2.41 years. The total fair value of RSUs vested during the six months ended June 30, 2021 was $25,846.
The following table is a summary of the RSU activity for the six months ended June 30, 2021:
Number of Shares Weighted Average Grant Date Fair Value
Unvested outstanding as of December 31, 2020 467,160  $56.00
Granted 1,093,250  $82.86
Forfeited (25,631) $75.23
Vested (355,308) $72.74
Unvested outstanding as of June 30, 2021 1,179,471  $75.43

21

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)

12.   Net Loss Per Share
Basic and diluted net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. was calculated as follows:
  Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Numerator:    
Net loss $ (211,159) $ (180,934) $ (476,487) $ (353,871)
Net loss attributable to non-controlling interests (540) —  (900) — 
Net loss attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd. $ (210,619) $ (180,934) $ (475,587) $ (353,871)
Denominator:
Weighted average common shares outstanding—basic and diluted 65,112,179  58,742,329  63,584,932  57,577,384 
Net loss per share attributable to common shareholders of Biohaven Pharmaceutical Holding Company Ltd.—basic and diluted $ (3.23) $ (3.08) $ (7.48) $ (6.15)

The Company’s potential dilutive securities, which include stock options, restricted share units, and warrants to purchase common shares, 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,
  2021 2020
Options to purchase common shares 8,573,800  8,120,648 
Warrants to purchase common shares 106,751  106,751 
Restricted share units 1,179,471  477,798 
 Total 9,860,022  8,705,197 

13.  License and Other Agreements
Yale University Agreements
In September 2013, the Company entered into an exclusive license agreement with Yale University (the "Yale Agreement") 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. As part of the consideration for this license, the Company issued Yale 250,000 common shares and granted Yale the right to purchase up to 10% of the securities issued in specified future equity offerings by the Company, in addition to the obligation to issue shares to prevent anti-dilution. The obligation to contingently issue equity to Yale was no longer outstanding as of December 31, 2018.
The Yale Agreement was amended and restated in May 2019. As amended, the Company agreed to pay Yale 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
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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
13.  License and Other Agreements (Continued)
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 a low single-digit percentage of sublicense income that it receives. To date, no milestone or royalty payments have been made under this agreement.
In January 2021, the Company entered 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, Biohaven acquired exclusive, worldwide rights to Yale'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 valued at approximately $1,000. Under the agreement, the Company may develop products based on the MoDE platform. The 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 Agreement, it must pay Yale 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 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.
For the three and six months ended June 30, 2021, excluding the upfront payments noted above, the Company did not record any material expense, or make any milestone or royalty payments under the Yale Agreement or the Yale MoDE Agreement.
ALS Biopharma Agreement
In August 2015, the Company entered into an agreement (the "ALS Biopharma Agreement") with ALS Biopharma and 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 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 agreement, payable on a quarterly basis. To date, no milestone or royalty payments have been made under this agreement.
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 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 six months ended June 30, 2021 and 2020, the Company did not record any expense or make any milestone or royalty payments under the ALS Biopharma Agreement.
Catalent Agreements for Rimegepant
In January 2018, the Company entered into an exclusive world-wide license and development agreement with Catalent U.K. Swindon Zydis Limited, a subsidiary of Catalent, Inc. ("Catalent") pursuant to which the Company obtained certain license rights to the Zydis ODT technology for use with NURTEC ODT. Since NURTEC ODT utilizes the Zydis ODT technology, the agreement permits the Company to purchase the commercial product from Catalent at a fixed price, inclusive of a royalty. Under the agreement, Catalent will not develop or manufacture a formulation of any oral CGRP compound using Zydis ODT technology for itself or a third party until 2031, subject to certain minimum commercial revenues.
Under this agreement, the Company is responsible for conducting clinical trials and preparing and filing regulatory submissions. The Company has the right to sublicense its rights under the agreement subject to Catalent’s prior written consent. Catalent has the right to enforce the patents covering the Zydis technology and to defend any allegation that a formulation using Zydis technology, such as NURTEC ODT, infringes a third party’s patent.
23

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
13.  License and Other Agreements (Continued)
This agreement terminates on a country-by-country basis upon the later of (i) 10 years after the launch of the most recently launched product in such country and (ii) the expiration of the last valid claim covering each product in such country, unless earlier voluntarily terminated by the Company or by Catalent. This agreement automatically extends for one-year terms unless either party gives advance notice of intent to terminate. In addition, Catalent may terminate the agreement either in its entirety or terminate the exclusive nature of the agreement on a country-by-country basis if, among other things, the Company fails to meet specified development timelines, which the Company may extend in certain circumstances.
In connection with the agreement with Catalent, upon FDA approval of NURTEC ODT on February 27, 2020, the Company became obligated to pay Catalent up to $1,500 upon the achievement of specified regulatory and commercial milestones. The Company recorded the $1,500 in milestone payments as an intangible asset in its condensed consolidated balance sheets in the first quarter of 2020, and is amortizing the expense to cost of goods sold on its condensed consolidated statement of operations and comprehensive loss over the patent life. The Company paid $750 of the $1,500 in milestone payments to Catalent in the first quarter of 2020 and paid the remaining $750 in milestone payments in the second quarter of 2020.
Rutgers Agreement
In June 2016, the Company entered into an exclusive license agreement (the "Rutgers Agreement") with Rutgers, The State University of New Jersey ("Rutgers"), licensing several patents and patent applications related to the use of riluzole to treat various cancers. Under the Rutgers Agreement, the Company is required to pay Rutgers annual license maintenance fees until the first commercial sale of a licensed product, at which point the Company will pay Rutgers minimum annual royalties. The Company is also obligated to pay Rutgers up to $825 in the aggregate upon the achievement of specified clinical and regulatory milestones. The Company agreed to pay Rutgers royalties of a low single-digit percentage of net sales of licensed products sold by the Company, its affiliates or its sublicensees, subject to a minimum amount of up to $100 per year. If the Company grants any sublicense rights under the Rutgers Agreement, the Company must pay Rutgers a low double-digit percentage of sublicense income it receives.
Under the Rutgers Agreement, in the event that the Company experiences a change of control or sale of substantially all of its assets prior to the initiation of a Phase 3 clinical trial related to products licensed under the agreement, and such change of control or sale results in a full liquidation of the Company, the Company will be obligated to pay Rutgers a change-of-control fee equal to 0.30% of the total value of the transaction, but not less than $100. The Company determined that the change-of-control payment should be accounted for as a liability. The fair value of the obligation for all periods presented was $0 based on the Company's assessment that the probability of a change-in-control event occurring prior to the initiation of a Phase 3 clinical trial related to products licensed under the agreement was remote.
The Rutgers Agreement also requires the Company to meet certain due diligence requirements based upon specified milestones. The Company can elect to extend the deadline for its compliance with the due diligence requirements by a maximum of one year upon payments to Rutgers of up to $500 in the aggregate. Under the Rutgers Agreement, the Company is required to reimburse Rutgers for any fees that Rutgers incurs related to the filing, prosecution, defending, and maintenance of patent rights licensed under the agreement. The Rutgers Agreement expires upon expiration of the patent rights under the agreement or ten years from the date of first commercial sale of a licensed product, whichever is later, unless terminated by either party.
For the three and six months ended June 30, 2021 and 2020, the Company did not record any material expense or make any milestone or royalty payments under the Rutgers Agreement.
BMS Agreement
In July 2016, the Company entered into an exclusive, worldwide license agreement with BMS (the "BMS Agreement") for the development and commercialization rights to rimegepant and zavegepant, as well as other CGRP-related intellectual property. In exchange for these rights, the Company agreed to pay BMS initial payments, milestone payments and royalties on net sales of licensed products under the agreement.
The Company is obligated to make milestone payments to BMS upon the achievement of specified development and commercialization milestones. The development milestone payments due under the agreement depend on the licensed product being developed. With respect to rimegepant, the Company is obligated to pay up to $127,500 in the aggregate upon the
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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
13.  License and Other Agreements (Continued)
achievement of the development milestones. For any product other than rimegepant, the Company is obligated to pay up to $74,500 in the aggregate upon the achievement of the development milestones. In addition, the Company is obligated to pay up to $150,000 for each licensed product upon the achievement of commercial milestones. If the Company receives revenue from sublicensing any of its rights under the agreement, it is also obligated to pay a portion of that revenue to BMS. The Company is also obligated to make tiered royalty payments to BMS based on annual worldwide net sales, with percentages in the low to mid-teens.
Under the BMS Agreement, the Company is obligated to use commercially reasonable efforts to develop licensed products and to commercialize at least one licensed product using the patent rights licensed from BMS and is solely responsible for all development, regulatory and commercial activities and costs. The Company is also required to reimburse BMS for any fees that BMS incurs related to the filing, prosecution, defending, and maintenance of patent rights licensed under the BMS Agreement. Under the BMS Agreement, BMS transferred to the Company manufactured licensed products, including certain materials that will be used by the Company to conduct clinical trials.
The BMS Agreement will terminate on a licensed product-by-licensed product and country-by-country basis upon the expiration of the royalty term with respect to each licensed product in each country and can also be terminated if certain events occur, e.g., material breach or insolvency.
In March 2018, the Company entered into an amendment to the BMS Agreement (the “2018 BMS Amendment”) Under the 2018 BMS Amendment, the Company paid BMS an upfront payment of $50,000 in return for a low single-digit reduction in the royalties payable on net sales of rimegepant and a mid single-digit reduction in the royalties payable on net sales of zavegepant, recorded in Research and Development expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
The BMS Amendment also removes BMS’s right of first negotiation to regain its intellectual property rights or enter into a license agreement with the Company following the Company’s receipt of topline data from its Phase 3 clinical trials with rimegepant, and clarifies that antibodies targeting CGRP are not prohibited as competitive compounds under the non-competition clause of the Original License Agreement.
In August 2020, the Company entered into a further amendment of the BMS Agreement (the “August 2020 BMS Amendment”) Under the August 2020 BMS Amendment, the Company paid BMS an upfront payment of $5,000 in return for a reduction in the royalties payable on net sales of rimegepant and zavegepant in China, with percentages in the low to mid-single digits. In addition, the Company is obligated to pay up to $22,500 for each licensed product upon the achievement of commercial milestones in China. The August 2020 BMS Amendment also amended the BMS Agreement to remove sales in China from the commercial milestone payment obligations.
In November 2020, the Company entered into a further amendment of the BMS Agreement (the “November 2020 BMS Amendment”). Under the November 2020 BMS Amendment, certain exclusivity provisions under the BMS Agreement are waived which permits the Company to develop certain CGRP compounds licensed by the Company from Heptares Therapeutics Limited (“Heptares”). Under the November 2020 Amendment, if the Company initiates clinical development of a Heptares compound prior to July 8, 2023, the Company is obligated to pay BMS certain fees based on net sales of the Heptares compounds from low single percentage to 10% and pay up to $17,500 for each Heptares compound upon the achievement of certain development milestones and up to $150,000 for each Heptares compound upon the achievement of certain commercial milestones. No fees or milestones are due by the Company to BMS for Heptares compounds that begin clinical trials after July 8, 2023.
The BMS License Agreement continues to provide the Company with exclusive global development and commercialization rights to rimegepant, zavegepant and related CGRP molecules, as well as related know-how and intellectual property. The Company’s obligations to make development milestone payments to BMS under the Original License Agreement remain unchanged.
In connection with the BMS Agreement, upon FDA approval of NURTEC ODT on February 27, 2020, the Company became obligated to pay BMS $40,000 in milestone payments. The Company recorded the $40,000 in milestone payments as an intangible asset on its condensed consolidated balance sheets in the first quarter of 2020, and will amortize the expense to cost of goods sold on its condensed consolidated statement of operations and comprehensive loss over the patent life. The Company
25

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
13.  License and Other Agreements (Continued)
paid $20,000 of the $40,000 in milestone payments to BMS in the first quarter of 2020 and the remaining $20,000 in milestone payments in the third quarter of 2020.
In connection with the BMS Agreement, the Company was required to pay $2,000 to BMS on commencement of a Phase 1 clinical trial, $4,000 on commencement of a Phase 2 clinical trial, and $6,000 on commencement of a Phase 3 clinical trial, the occurrence of which the Company believes is probable, for certain milestones relating to the development of zavegepant. Accordingly, the Company recognized these liabilities in accrued expenses within the condensed consolidated balance sheets in the fourth quarter of 2018, first quarter of 2019, and fourth quarter of 2019, respectively. Per the BMS Agreement, the $2,000 and $4,000 payment obligations under the agreement were deferred until the earlier of FDA approval of rimegepant or the discontinuation of the rimegepant development program. Upon FDA approval of NURTEC ODT on February 27, 2020, the Company became obligated to pay BMS the $2,000 and $4,000 milestone payments for the commencement of the Phase 1 and Phase 2 clinical trials of zavegepant, respectively, and made the milestone payments in the second quarter of 2020. The Company paid the $6,000 milestone payment following the commencement of the Phase 3 clinical trial of zavegepant in the fourth quarter of 2020. In the first quarter of 2021, the Company accrued a $5,000 development milestone expense following the regulatory filing for rimegepant in Europe, which was paid in the second quarter of 2021.
For the three and six months ended June 30, 2021, the Company recorded $9,293 and $13,678, respectively, in royalty expense in cost of goods sold on the condensed consolidated statements of operations and comprehensive loss under the BMS agreement. For the three and six months ended June 30, 2020, the Company recorded $860 and $975, respectively, in royalty expense in cost of goods sold on the condensed consolidated statements of operations and comprehensive loss under the BMS 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 agreement depend on the indication of the licensed product being developed as well as the territory where regulatory approval is obtained. Development milestones due under the 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 agreement and total up to $120,000. The Company has also agreed to pay tiered royalties based on net sales of all products licensed under the agreement of mid-single-digit to low double-digit percentages. 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. To date, no payments have been made related to these milestones or royalties. 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 six months ended June 30, 2021 and 2020, the Company did not record any expense or make any milestone or royalty payments under the 2016 AstraZeneca Agreement.
Revenue Participation Rights
In June 2018, pursuant to the 2018 RPI Funding Agreement entered into by the Company and RPI (Note 7), the Company granted to RPI the right to receive certain revenue participation payments, subject to certain reductions, based on the future global net sales of the Products, for each calendar quarter during the royalty term contemplated by the 2018 RPI Funding Agreement, in exchange for $100,000 in cash. Specifically, the participation rate commences at 2.1 percent on annual global net sales of up to and equal to $1,500,000, declining to 1.5 percent on annual global net sales exceeding $1,500,000.
In connection with the 2018 RPI Funding Agreement, the Company recorded, $12,049 and $23,468 in interest expense on its liability related to sale of future royalties for the three and six months ended June 30, 2021, respectively, and $11,570 and
26

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
13.  License and Other Agreements (Continued)
$19,995 in interest expense on its liability related to sale of future royalties for the three and six months ended June 30, 2020, respectively, The Company paid $920 and $1,656 under the 2018 RPI Funding Agreement during the three and six months ended June 30, 2021, respectively and no payments under the 2018 RPI Funding Agreement during the three and six months ended June 30, 2020.
In August 2020, pursuant to the 2020 RPI Funding Agreement, the Company sold sales-based participation rights on global net sales of products containing zavegepant and rimegepant to RPI 2019 IFT for aggregate funding of $250,000, payable in two tranches. For further details on the transaction see Note 7 “Liability Related to Sale of Future Royalties, net.”
In connection with the 2020 RPI Funding Agreement, the Company recorded $2,450 and $4,539 in interest expense on its liability related to sale of future royalties for the three and six months ended June 30, 2021, and no interest expense for the three and six months ended June 30, 2020 . The Company recorded payments of $175 and $315 during the three and six months ended June 30, 2021, and no payments under the 2020 RPI Funding Agreement during the three and six months ended June 30, 2020.
2018 License Agreement with AstraZeneca
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. 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, both of which were included in research and development expense, 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, we will pay AstraZeneca tiered royalties ranging from high single-digit to low double-digits based on net sales of specified approved products, subject to specified reductions.
The Company plans to conduct a Phase 3 clinical trial of this product candidate, which is now referred to as verdiperstat, for the treatment of multiple system atrophy (“MSA”), a rare, rapidly progressive and fatal neurodegenerative disease with no cure or effective treatments. 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 to any milestone payments it would otherwise be obligated to pay.
The 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 six months ended June 30, 2021 and 2020, excluding the upfront payments noted above, the Company did not record any material expense or make any milestone or royalty payments under the 2018 AstraZeneca Agreement.
Fox Chase Chemical Diversity Center Inc. Agreement
In May 2019, Biohaven entered into the FCCDC Agreement in 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, Biohaven issued 100,000 of its common shares to FCCDC valued at $5,646. The payment was recorded in research and development expense in the consolidated statement of operations for the year ended December 31, 2019.
In addition, Biohaven is obligated to pay FCCDC milestone payments totaling up to $4,500 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 Biohaven common shares, at a strike price of $56.46 per share, subject to vesting upon achievement of certain milestones in development of TD-43.
In connection with the FCCDC Agreement, Biohaven 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
27

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
13.  License and Other Agreements (Continued)
FCCDC. In addition to the milestone payments, 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 payments 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.
The Company recorded $509 and $1,321 in research and development expense in the condensed consolidated statements of operations and comprehensive loss related to the Research Plan milestones with FCCDC during the three and six months ended June 30, 2021, respectively. The Company recorded $450 and $1,405 of expense related to this agreement during the three and six months ended June 30, 2020, respectively.
Sosei Heptares
In November 2020, the Company entered into a global collaboration and license agreement with Heptares Therapeutics Ltd. (the "Heptares Agreement") to obtain rights to develop, manufacture and commercialize a portfolio of novel, small-molecule CGRP receptor antagonists discovered by Sosei Heptares for the treatment of CGRP-mediated disorders. The portfolio includes the lead candidate BHV-3100 (also known as "HTL0022562"), which has advanced through preclinical development demonstrating promising and differentiated properties for further investigation in human trials. As part of consideration for this license, the Company paid Sosei Heptares an upfront cash payment of $5,000 and 54,617 shares valued at $4,858, both of which were included in research and development expense on the consolidated statement of operations. In addition, Sosei Heptares will be eligible to receive additional development, regulatory and commercialization milestone payments of up to $370,000, as well as earned royalties equal to zero to ten percent of net sales of products resulting from the collaboration. The royalty payments are payable on a country-by-country and licensed product-by-licensed product basis from the date of commercial launch of a licensed product by Biohaven until the later of: (a) the expiration of the last valid claim covering the composition of matter of such licensed product, or its use or manufacture, in such country; (b) expiration of the regulatory exclusivity period for such licensed product in the relevant country; and (c) ten (10) years following the date of the commercial launch of such licensed product in the relevant country.
Biohaven has the right to terminate the Heptares Agreement for any reason or no reason: (a) in its entirety during the research term on one hundred and eighty (180) days’ written notice to Sosei Heptares; and (b) following the end of the research term, in its entirety or on a country-by-country basis, on ninety (90) days’ prior written notice to Sosei Heptares. Biohaven will remain liable to pay (a) any milestone payments that have become due for payment and/or (b) royalty payments on net sales by Biohaven, in each case (a) and (b) on or before the termination date.
Heptares has the right to terminate the Heptares Agreement on thirty (30) days’ written notice to Biohaven if after the end of the research term, for a continuous period of not less than three hundred and sixty five (365) days, no material Development activities have been undertaken by or on behalf of Biohaven on any licensed product; provided that, at least three (3) months prior to exercising such termination right Heptares must notify Biohaven of its concerns and the parties shall discuss in good faith the reasons why Biohaven is not undertaking such material development activities and its plans for recommencing such activities.
For the three and six months ended June 30, 2021, in addition to the upfront payments noted above, the Company recorded $2,868 and $3,485, respectively, in research and development expense related to the Heptares Agreement.
Artizan Biosciences Inc.
In December 2020, Biohaven entered into an Option and License Agreement with Artizan Biosciences Inc. (the "Artizan Agreement"). Pursuant to the Artizan Agreement, Biohaven acquired an option (“Biohaven Option”) to obtain a royalty-based license from Artizan to manufacture, use and commercialize certain products in the United States. 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. Biohaven and Artizan have also formed a JSC to oversee, review and
28

BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
13.  License and Other Agreements (Continued)
coordinate the product development activities with regard to all products for which Biohaven has (or has exercised in the future) the Biohaven Option.
In December 2020, simultaneously with the Option and License Agreement, the Company and Artizan entered into a Series A-2 Preferred Stock Purchase Agreement, under which Biohaven acquired 34,472,031 shares of series A-2 preferred stock (the “Series A-2 Preferred Stock”) of Artizan, for a total purchase price of approximately $6,000. The purchase price was paid in shares of Biohaven’s common stock in January 2021. The Company recorded the fair value of the Series A-2 Preferred Stock as an other asset on its consolidated balance sheets.
For the three and six months ended June 30, 2021, excluding the upfront payments noted above, the Company did not record any research and development expense or make any milestone payments related to the Artizan Agreement.
Moda Pharmaceuticals LLC.
On January 1, 2021, the Company entered into a consulting services agreement with Moda Pharmaceuticals LLC (the "Moda Agreement") 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 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 six months ended June 30, 2021, excluding the upfront payments noted above, the Company did not record any material research and development expense or make any milestone payments related to the Moda Agreement.
Reliant Glycosciences, LLC
In July 2021, the Company entered into a development and licenses agreement with Reliant Glycosciences, LLC (the "Reliant Agreement"). Under the Reliant Agreement, the Company paid Reliant an upfront share payment valued at approximately $3,686. In addition, Reliant will be eligible to receive development milestone payments of up to $36,500, and royalties of a low single-digit percentage of net sales of licensed products.

14.   Debt

In August 2020, the Borrowers, entered into the Sixth Street Financing Agreement, as amended, pursuant to which the Lenders agreed to extend a senior secured credit facility to the Company providing for term loans in an aggregate principal amount up to $500,000 plus any capitalized interest paid in kind. The facility consists of an initial term loan of $275,000, which the Borrowers borrowed at closing, and delayed draw term loans in an aggregate principal amount not exceeding $225,000, available until August 31, 2021. The facility terminates and the term loans become due and payable in August 2025. For additional information on the credit facility and outstanding term loan, see Note 19 “Debt” in the 2020 Form 10-K.
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BIOHAVEN PHARMACEUTICAL HOLDING COMPANY LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
14. Debt (Continued)
The following table is a summary of the Company’s borrowing as of June 30, 2021:
June 30, 2021
Long-term debt
Floating rate note due August 2025 (10.00% at June 30, 2021)(1)
 $ 285,127 
Total debt principal 285,127 
Unamortized debt discount and issuance costs (10,989)
Less: current portion — 
Long-term debt $ 274,138 
(1) Includes $5,649 of paid in kind interest that was added to the principal during the six months ended June 30, 2021

15.   Commitments and Contingencies
Summarized below are the matters previously described in Note 20 of the Notes to the Consolidated Financial Statements in the Company's Form 10-K for the year ended December 31, 2020, updated as applicable.
Research Commitments
The Company has entered into agreements with several contract research organizations to provide services in connection with its preclinical studies and clinical trials. The Company commits to minimum payments under these arrangements.
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 certain executive officers and members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. The Company’s amended and restated memorandum and articles of association also provide for indemnification of directors and officers in specified 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 condensed consolidated financial statements as of June 30, 2021 or December 31, 2020.
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 June 30, 2021, there were no matters which would have a material impact on the Company’s financial results.

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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 consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission (“SEC”). 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. 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 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 commercial-stage biopharmaceutical company with a marketed product, NURTEC® ODT (rimegepant), for the acute and preventive treatment of migraine and a portfolio of innovative product candidates targeting neurological diseases, including rare disorders. NURTEC ODT, was approved by the U.S. Food and Drug Administration ("FDA") for the acute treatment of migraine on February 27, 2020, which became available by prescription in U.S. pharmacies on March 12, 2020, and for the preventive treatment of migraine on May 27, 2021. NURTEC ODT is the first and only calcitonin gene-related peptide ("CGRP") receptor antagonist available in a quick-dissolve orally dissolving tablet ("ODT") formulation that is approved by the FDA for both the acute and preventive treatment of migraine in adults. Our other late-stage product candidates are based on multiple mechanisms —CGRP receptor antagonists, glutamate modulators and myeloperoxidase inhibition—which we believe have the potential to significantly alter existing treatment approaches across a diverse set of neurological indications with high unmet need in both large and orphan indications.
Our late-stage programs include the following:
Product Platform Indication Development Stage
NURTEC ODT CGRP Acute treatment of migraine
•Approved by the FDA on February 27, 2020 and commercialization began in March 2020.
•Phase 3 trial for China and Korea ongoing.
NURTEC ODT CGRP Prevention of migraine Approved by the FDA on May 27, 2021.
Rimegepant CGRP Pediatric acute treatment of migraine Phase 3 trial ongoing.
Zavegepant CGRP Acute treatment of migraine Intranasal Phase 3 trial ongoing. Results expected in the second half of 2021.
Zavegepant CGRP Prevention of migraine Oral Phase 3 trial ongoing.
Troriluzole Glutamate Ataxias Phase 2/3 randomization phase in spinocerebellar ataxia ("SCA") complete and multi-year extension trial ongoing. Global registrational Phase 3 trial completed enrollment and ongoing in the U.S. and China. Results expected in the first half of 2022.
Troriluzole Glutamate Obsessive Compulsive Disorder (“OCD”) Two Phase 3 trials ongoing. Results expected in the second half of 2022.
Verdiperstat MPO Multiple System Atrophy ("MSA") Phase 3 trial completed enrollment and ongoing. Results expected in third quarter of 2021.
Verdiperstat MPO Amyotrophic Lateral Sclerosis
("ALS")		 Phase 3 HEALEY ALS Platform Trial ongoing. Enrollment expected to complete in fourth quarter of 2021.
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CGRP Platform
In July 2016, we acquired exclusive, worldwide rights to our CGRP receptor antagonist platform, including rimegepant and zavegepant (previously known as BHV-3500 and vazegepant), through a license agreement, as amended, with Bristol-Myers Squibb Company (“BMS”). In December 2020, Heptares Therapeutics Ltd. ("Sosei Heptares") and Biohaven entered a global collaboration and license agreement (the "Heptares Agreement") under which Biohaven received exclusive global rights to develop, manufacture and commercialize a portfolio of novel, small-molecule CGRP receptor antagonists discovered by Sosei Heptares for the treatment of CGRP-mediated disorders. The most advanced of these is BHV-3100, previously known as HTL0022562.
Rimegepant
The most advanced product candidate from our CGRP receptor antagonist platform is rimegepant, an orally available, potent and selective small molecule human CGRP receptor antagonist that we developed for the acute and preventive treatment of migraine. During the second quarter of 2019, we submitted NDAs for the acute treatment of migraine to the FDA for the Zydis ODT and tablet formulations of rimegepant. The NDA submission for the Zydis ODT formulation of rimegepant was submitted using an FDA priority review voucher, purchased in March 2019, providing for an expedited 6-month review. The Zydis ODT formulation of rimegepant (NURTEC ODT) was approved by the FDA for the acute treatment of migraine on February 27, 2020 and was available by prescription in U.S. pharmacies on March 12, 2020. During the fourth quarter of 2020, we submitted an sNDA for the preventive treatment of migraine to the FDA for NURTEC ODT. The FDA approved NURTEC ODT for the preventive treatment of migraine on May 27, 2021.
Due to the early success and life-cycle benefits for NURTEC ODT, we determined that there were no significant added benefits to patients for the tablet formulation and that it was in the Company’s best interests not to expend the resources to commercialize the tablet formulation of rimegepant for the acute treatment of migraine. In May 2020, we withdrew the rimegepant tablet NDA that was pending with the FDA.
The Company remains focused on investing in the long-term success of the launch by driving new-to-brand prescriptions , and ultimately market share, in this rapidly growing oral CGRP market and is continuing to observe a positive return on investment with increasing physician advocacy and attracting a greater pool of patients. We believe that the rapid adoption of NURTEC ODT is evidence of significant unmet need among people with migraine and an associated large acute therapy market opportunity. It is important to note that the injectable anti-CGRP prevention market has not been negatively impacted by the oral anti-CGRP (or gepant) class growth, which signifies two distinct and sizable migraine market segments. The Company continues to expand commercial payer coverage, with NURTEC ODT now covered by insurance providers reflecting 89% of commercial lives.
A summary of key rimegepant studies is described below.
Study 301/Study 302
In March 2018, we announced positive topline data from our first two pivotal Phase 3 trials (“Study 301 and Study 302”) for the acute treatment of migraine. In each trial, treatment with a single 75 mg dose of rimegepant met the co-primary efficacy endpoints of the trial, which were superior to placebo, at two hours post-dose, on measures of pain freedom and freedom from the patient’s most bothersome symptoms ("MBS"). In addition to achieving both co-primary endpoints in each of the trials, rimegepant also was observed to be generally safe and well-tolerated in the trials, with a safety profile similar to placebo. The co-primary endpoints achieved in the Phase 3 trials were consistent with regulatory guidance from the FDA and provided the basis for the submission of a NDA to the FDA.
Study 303
A third Phase 3 clinical trial for the acute treatment of migraine with a bioequivalent ODT formulation of rimegepant was commenced in February 2018. On December 3, 2018, we announced positive topline data from this randomized, controlled Phase 3 clinical trial (“BHV3000-303” or “Study 303”) evaluating the efficacy and safety of our Zydis ODT formulation of rimegepant for the acute treatment of migraine. Rimegepant differentiated from placebo on the two co-primary endpoints using a single dose, pain freedom and freedom from the MBS at two hours. In total, rimegepant was significantly differentiated from the placebo in the first 21 consecutive primary and secondary outcome measures that were pre-specified. Patients treated with the rimegepant Zydis ODT formulation began to numerically separate from placebo on pain relief as early as 15 minutes, and this difference was statistically significant at 60 minutes. Additionally, a significantly greater percentage of patients treated with rimegepant Zydis ODT returned to normal functioning by 60 minutes and lasting clinical benefit compared to placebo was observed through 48 hours after a single dose of rimegepant on freedom from pain, pain relief, freedom from the MBS, and freedom from functional disability. The safety and tolerability observations of rimegepant in Study 303 were consistent with our previous observations. The overall rates of adverse events were similar to placebo (13.2% with respect to rimegepant compared to 10.5% with placebo). The co-primary endpoints achieved in the Phase 3 trials were consistent with regulatory guidance from the FDA and formed the basis of efficacy data required by the FDA for approval.
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Study 305
In November 2018, we initiated a double-blind, placebo-controlled Phase 3 clinical trial examining regularly scheduled dosing of rimegepant 75 mg to evaluate its efficacy and safety as a preventive therapy for migraine (“BHV3000-305” or “Study 305”). In March 2020, Biohaven announced positive topline results from this study. Rimegepant 75 mg, dosed every other day, demonstrated statistically significant superiority, compared to placebo, on the primary endpoint of reduction in the mean number of migraine days per month in both episodic and chronic migraine patients. The safety profile seen in the 370 patients who received rimegepant 75 mg every other day was consistent with prior clinical trial experience. With this trial, rimegepant has become the only CGRP targeted therapy to demonstrate efficacy in both the acute and preventive treatment of migraine. An sNDA for rimegepant for prevention of migraine was filed with the FDA and accepted for review in the fourth quarter of 2020. The FDA approved NURTEC ODT for the preventive treatment of migraine on May 27, 2021.
Pediatric Study Plan
In June 2019, the FDA agreed to our Pediatric Study Plan for the acute treatment of migraine. The pediatric program was initiated in the fourth quarter of 2020.
Trigeminal Neuralgia
In the second quarter of 2019, we initiated a Phase 2 proof of concept trial to evaluate the safety and efficacy of rimegepant in patients with treatment refractory trigeminal neuralgia. Trigeminal neuralgia is a chronic facial pain syndrome characterized by paroxysmal, severe, and lancinating episodes of pain in the distribution of one or more branches of the trigeminal nerve. The trigeminal nerve, or fifth cranial nerve, is the largest of the 12 cranial nerves and provides sensory innervation to the head and neck, as well as motor innervation to the muscles of mastication. These episodic bouts of severe facial pain can last seconds to minutes, occur several times per day, and often result in significant disability. Over the long- term course of the disease, symptoms often become refractory to medical therapy and current treatment options remain suboptimal.
Plaque Psoriasis
In the fourth quarter of 2020, we announced a collaboration with Weill Cornell Medicine's Dr. Richard Granstein, Chairman of Dermatology, to initiate an investigator-led clinical trial, which will explore whether treatment with one of Biohaven's CGRP-receptor antagonists will reduce the severity of disease and percentage of area affected as measured by patients' Psoriasis Activity Severity Index (PASI) score after 16 weeks of treatment as compared to placebo. In addition, the study will assess the potential impact on itch and patient quality-of-life measures. Psoriasis is a chronic and painful autoimmune disease characterized by red patches of dry, cracked skin that may bleed, itch, and burn that affects approximately 7- 8 million people in the U.S.
International Health Authority Interactions
Scientific advice for rimegepant for acute and preventive migraine treatment was received from the Committee for Medicinal Products for Human Use, a committee of the European Medicines Agency, in June and December 2018, respectively. In the first quarter of 2021, we submitted the Marketing Authorization Application ("MAA") for rimegepant dual activity, inclusive of acute and prevention of migraine. The submission has been validated by the European Medicines Agency and the European Commission procedure is ongoing. If approved, Vydura will be the commercial name for rimegepant in the EU. Filings in Israel and the Middle East began in 2020. In March 2021, we received approval for rimegepant in Israel and the UAE, and we anticipate further approvals in 2021 and 2022. In the second quarter of 2020, we entered into agreements with Genpharm Services and Medison Pharma to distribute NURTEC ODT in the Middle East & Gulf Countries and Israel, respectively. With respect to Japan, we are engaging the Pharmaceuticals and Medical Devices Agency ("PMDA") on a path forward, and initiation of Phase 2/3 bridging studies are anticipated to begin in the fourth quarter of 2021.
In January 2019, we and our subsidiary, BioShin (Shanghai) Consulting Services Company Ltd. (“BioShin Shanghai”), a Shanghai based limited liability company, jointly announced that the National Medical Products Administration (“NMPA,” formerly, the China FDA) had accepted the Investigational New Drug (“IND”) application for rimegepant for the treatment of migraine. As previously announced, BioShin Shanghai was established to develop and potentially commercialize our late-stage migraine and neurology portfolio in China and other Asia-Pacific markets. Following the results of Study 303, we submitted a second IND application to the NMPA for the Zydis ODT formulation of rimegepant for the acute treatment of migraine. The IND application for the Zydis ODT formulation of rimegepant was accepted by the NMPA in the fourth quarter of 2019. In September 2020, BioShin Limited ("BioShin"), our subsidiary and the parent organization of BioShin Shanghai, raised $60.0 million in series A funding which is being used to build out BioShin in China and advance the Biohaven clinical portfolio in the Asia-Pacific region. In November 2020, BioShin initiated a double-blind, randomized Phase 3 clinical trial evaluating the safety and efficacy of NURTEC ODT (rimegepant) for the acute treatment of migraine in China and Korea.
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Zavegepant
BHV-3500, formerly "vazegepant", is now referred to as "zavegepant" (za ve’ je pant).  The World Health Organization (WHO) International Nonproprietary Names (INN) Expert Committee revised the name to "zavegepant" which was accepted by the United States Adopted Names Council for use in the U.S. and is pending formal adoption by the INN for international use.
Administration of intranasal zavegepant in a Phase 1 clinical trial was initiated in October 2018 and achieved targeted therapeutic exposures. We advanced zavegepant into a Phase 2/3 trial to evaluate its efficacy for the acute treatment of migraine in the first quarter of 2019. We believe that intranasal zavegepant may provide an ultra-rapid onset of action that could be used in a complementary fashion with other migraine treatments when the speed of onset is critical to a patient. In December 2019, we announced positive topline results from the Phase 2/3 trial. Zavegepant 10 and 20 mg was statistically superior to placebo on the co-primary endpoints of pain freedom and freedom from the MBS at two hours using a single dose. A second Phase 3 trial was initiated in fourth quarter of 2020 with results expected in the second half of 2021.
In April 2020, Biohaven announced its plan to study intranasal zavegepant in pulmonary complications of COVID-19 disease. The IND was approved by the Division of Pulmonary, Allergy, and Critical Care at FDA in April 2020, and a Phase 2 trial began in April 2020 in collaboration with Thomas Jefferson University and other academic medical institutions. The clinical trial will assess the potential benefits of CGRP receptor-blockade in mitigating an excessive immune response which in some cases can be fatal in COVID-19 patients.
In September 2020, the Company announced that the FDA authorized the initiation of clinical trials for oral zavegepant and that the Company has achieved first in human dosing in a Phase 1 trial designed to assess the safety and pharmacokinetics of oral formulations of zavegepant. In March 2021, we announced that our Phase 3 clinical program to assess the efficacy of oral zavegepant in the preventive treatment of migraine began enrollment. Additionally, we expect to begin trials in other nonmigraine areas later this year.
BHV-3100
BHV-3100, previously known as HTL0022562, is the most advanced clinical candidate being developed through a global collaboration and license agreement between Biohaven and Sosei Heptares. Under the agreement, Biohaven received exclusive global rights to develop, manufacture and commercialize a portfolio of novel, small-molecule CGRP receptor antagonists discovered by Sosei Heptares for the treatment of CGRP-mediated disorders.
BHV-3100 was developed successfully through preclinical trials by Sosei Heptares and demonstrated promising and differentiated properties in target CGRP-mediated disorders. In June 2021, Sosei Heptares announced that BHV-3100 had entered a Phase 1 study with the dosing of a first healthy subject. Future studies are being planned to target common and rare diseases.

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 in multiple Phase 3 trials. Other product candidates include sublingual riluzole (BHV-0223) and BHV-5500, an antagonist of the glutamate N-methyl-D-aspartate (“NMDA”) receptor.
Troriluzole
Ataxias
We are developing troriluzole for the treatment of ataxias; our initial focus has been spinocerebellar ataxia ("SCA"). We have received both orphan drug designation and fast track designation from the FDA for troriluzole for the treatment of SCA. A Phase 2/3 trial began enrollment in March 2019 to evaluate the efficacy of troriluzole in SCA. We believe that the non-statistically significant clinical observations from our first Phase 2/3 trial and open-label extension phase in SCA support our decision to advance troriluzole into a Phase 3 trial that could provide the data needed to serve as the basis for an NDA. We completed enrollment in the Phase 3 trial of troriluzole in SCA in the first quarter of 2021. Results are expected in the first half of 2022.
Other Indications
A Phase 2/3 double-blind, randomized, controlled trial to assess the efficacy of troriluzole in OCD commenced 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 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 (p = 0.22 at week 12) but was significant at week 8 (p < 0.05). Troriluzole was well tolerated with a safety profile consistent with past clinical trial experience. Given the strong signal in the
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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 the Phase 3 program. Two Phase 3 studies are currently ongoing with results expected in the second half of 2022.
In addition, a Phase 2/3 double-blind, randomized, controlled trial of troriluzole in the treatment of mild-to-moderate Alzheimer’s disease ("AD") was advanced with the Alzheimer’s Disease Cooperative Study, a consortium of sites funded by the National Institutes of Health. In the fourth quarter of 2019, we completed enrollment in the study and announced that the study passed the interim futility analysis. In order to pass the interim futility analysis, troriluzole had to demonstrate numerically greater benefit over placebo on at least one of the two pre-specified criteria at 26 weeks: either (i) cognitive function as measured by the Alzheimer’s Disease Assessment Scale-Cognitive Subscale (“ADAS-cog”) or (ii) hippocampal volume as assessed by magnetic resonance imaging. In January 2021, topline data from the trial revealed that troriluzole did not statistically differentiate from placebo at 48 weeks on the study's prespecified co-primary endpoints on the Alzheimer's Disease Assessment Scale-Cognitive Subscale and the Clinical Dementia Rating Scale Sum of Boxes in study participants with mild-to-moderate AD. Troriluzole also did not differentiate from placebo on the key secondary measure of hippocampal volume assessed by magnetic resonance imaging (MRI) in the overall population. A subgroup analysis consisting only of mild AD patients did, however, reveal that troriluzole exhibited a nonsignificant numerical difference of a potential benefit at week 48 on both the ADAS-cog and hippocampal volumetric MRI. Although the numerical effects on the ADAS-cog and hippocampal MRI measured in mild AD patients suggests a potential biologic effect of troriluzole in patients with early stage disease, additional analyses and biomarker data will be informative and help determine whether any further study in early AD is warranted. Full study results, including additional secondary and exploratory outcomes, biomarker, and subgroup analyses, are expected in the coming months and will be presented at an upcoming scientific meeting. With regard to safety and tolerability, treatment with troriluzole at a dose of 280 mg once daily was relatively well tolerated and demonstrated a safety profile consistent with previous studies of troriluzole. Biohaven has amended the ongoing long-term extension study of troriluzole in AD for mild AD patients to be able to continue treatment in order to gather additional clinical and biomarker data.
International Development
In the third quarter of 2020, BioShin raised $60.0 million in series A funding which will be used to build out BioShin Limited in China and advance our clinical portfolio in the Asia-Pacific region, including initiating sites in China to participate in the global registrational Phase 3 trial of troriluzole in SCA. BioShin completed enrollment for the trial in China in the first quarter of 2021 with results expected in the first half of 2022.
BHV-5000 and BHV-5500
We are developing BHV-5500, a low-trapping NMDA receptor antagonist, for the treatment of neuropsychiatric diseases. One potential target indication includes 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 interest include post-herpetic neuralgia and diabetic peripheral neuralgia. We acquired worldwide rights to BHV-5000 and BHV-5500 under an exclusive license agreement with AstraZeneca AB in October 2016. We selected a lead formulation at the end of 2017 and completed single dosing in a Phase 1 clinical trial of BHV-5000 in January 2018 to evaluate its pharmacokinetic properties. Results from nonclinical studies limiting clinical dose of BHV-5000 have led us to focus on BHV-5500 (lanicemine). Current work is focused on formulation development.

MPO Platform
Verdiperstat
We are developing verdiperstat (previously BHV-3241), an oral myeloperoxidase inhibitor for the treatment of neurodegenerative diseases. One target indication is MSA, a rare, rapidly progressive and fatal neurodegenerative disease with no cure or effective treatments. Verdiperstat has received orphan drug designation for the treatment of MSA from both the FDA and the European Medicines Agency. In addition, Fast Track status was granted by the FDA in March 2020 for verdiperstat for the treatment for MSA. A Phase 3 trial began enrollment in July 2019 to evaluate the efficacy of verdiperstat in MSA. The trial completed enrollment in July 2020. Results are expected in the third quarter of 2021.
Another potential target indication is 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 (“NEALS”) 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 and is ongoing. Enrollment is expected to complete in the fourth quarter of 2021.
Verdiperstat was progressed through Phase 2 clinical trials by AstraZeneca. Seven clinical studies were completed by AstraZeneca, including four Phase 1 studies in healthy subjects, two Phase 2a studies in subjects with Parkinson’s disease, and
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one Phase 2b study in subjects with MSA. We have entered into an exclusive license agreement with AstraZeneca for the product candidate.

Preclinical
Option and License Agreement with the 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 have 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. If we choose to exercise the option, we would be obligated to pay UConn 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.
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 (See Note 13).
Sosei Heptares
In November 2020, we entered into a global collaboration and license agreement with Sosei Heptares, an international biopharmaceutical group focused on the discovery and early development of new medicines originating from their proprietary GPCR-targeted StaR technology and structure-based drug design platform capabilities. Under the agreement, Sosei Heptares will be eligible to receive development, regulatory and commercialization milestone payments, as well as tiered royalties on net sales of products resulting from the collaboration. In return, we will receive exclusive global rights to develop, manufacture and commercialize a portfolio of novel, small-molecule CGRP receptor antagonists discovered by Sosei Heptares for the treatment of CGRP-mediated disorders. The portfolio includes the lead candidate HTL0022562 now called BHV-3100, which has advanced through preclinical development demonstrating promising and differentiated properties for further investigation in human trials (See Note 13).
Artizan Biosciences, Inc.
In December 2020, we entered into an Option and License Agreement with Artizan Biosciences Inc. ("Artizan"), a biotechnology company focused on addressing inflammatory diseases involving the human intestinal microbiota. Pursuant to the 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 program for inflammatory bowel disease, which is anticipated to enter the clinic in 2022, as well as to explore additional disease targets (See Note 13).
Kleo Pharmaceuticals, Inc. and Biohaven Labs
In January 2021, we acquired the remaining approximately 58% of Kleo that we did not previously own. We have assumed Kleo's laboratory facilities located in Science Park in New Haven, Connecticut and formed Biohaven Labs to serve as the integrated chemistry and discovery research arm of Biohaven. Biohaven Labs will continue several existing Kleo discovery partnerships, including with the Bill and Melinda Gates Foundation for the development of a SARS-CoV-2 neutralizing therapy for COVID-19 and PeptiDream for the development of immuno-oncology therapeutics (See Note 6).
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. The Company intends to advance BHV-1200 into a full clinical development program. Accelerated development of the COVID-19 MATE program has been supported by the Bill and Melinda Gates Foundation. In addition, the in vitro data indicate that BHV-1200 may activate important immune system components including antibody-dependent cellular phagocytosis and antibody dependent cellular
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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.
BHV-1100
In the third quarter of 2021, Biohaven expects to initiate a Phase 1a/1b trial in multiple myeloma patients using its antibody recruiting molecule (ARM) BHV-1100 in combination with autologous cytokine induced memory-like (CIML) natural killer (NK) cells and immune globulin (IG) 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. (TYO: 4587). This clinical trial 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 remission prior to autologous stem cell transplant (ASCT).

Recent Developments
NURTEC ODT (Rimegepant) Patent Issuance
The United States Patent and Trademark Office has awarded a patent to the Company (US Pat. No. 11,083,724, to be issued on August 10, 2021) that is directed to our drug product, NURTEC ODT (rimegepant), as well as other CGRP inhibitors in an ODT form. The patent has a statutory expiration date of March 25, 2039, not including patent term adjustment or any potential patent term extension. The patent is also pending in major market countries throughout the world including Europe, Japan and China. Patent term extensions, or supplementary protection certificates, of up to five years can be obtained in the UK, all member states of the EU as well as Switzerland, Norway, Iceland, Japan, Korea and certain other countries.

Issuance of Common Shares for the March 2021 Offering
In March 2021, we issued and sold 2,686,409 common shares at a public offering price of $76.00 per share for net proceeds of approximately $199,500 after deducting underwriting discounts and commissions of approximately $4,167 and other offering expenses of approximately $500. In addition, in March 2021, the underwriter of the March follow-on offering exercised its option to purchase additional shares, and we issued and sold 402,961 common shares for net proceeds of approximately $30,000 after deducting underwriting discounts and commissions of approximately $625. Thus, the aggregate net proceeds from the follow-on offering, after deducting underwriting discounts and commissions and other offering costs, were approximately $229,500.
First Amendment to Sixth Street Financing Agreement
In August 2020, we and Biohaven Pharmaceuticals, Inc., our wholly-owned subsidiary (together with us, the "Borrowers"), entered into a financing agreement (the "Sixth Street Financing Agreement") with Sixth Street Specialty Lending, Inc. as administrative agent, various lenders (the "Lenders") and certain of our subsidiaries, as guarantors. Pursuant to the Sixth Street Financing Agreement, the Lenders agreed to extend a senior secured credit facility to the Borrowers providing for term loans in an aggregate principal amount up to $500.0 million plus any capitalized interest paid in kind. The credit facility consists of an initial term loan of $275.0 million, which the Borrowers borrowed at closing, and delayed draw term loans in an aggregate principal amount not exceeding $225.0 million, available until August 31, 2021, with $100.0 million of the delayed draw term loans currently available at the Borrowers' option. The remaining $125.0 million in delayed draw term loans becomes available if net sales from NURTEC ODT during the first quarter of 2021 or second quarter of 2021 equal at least $45.0 million. The facility terminates in August 2025.
On March 1, 2021, the Borrowers, and certain other of our subsidiaries entered into the First Sixth Street Financing Amendment, with Sixth Street Specialty Lending, Inc., as administrative agent, and the lenders party thereto. Pursuant to the First Sixth Street Financing Amendment, the parties agreed to, among other things remove the $45.0 million delayed draw sales milestone tied to the availability of the $125.0 million tranche of delayed draw term loans. As of June 30, 2021, the full $225 million aggregate principal amount of delayed draw term loans is available to draw at the Borrowers’ option through August 31, 2021.
Acquisition of Kleo Pharmaceuticals, Inc.
On January 1, 2021, we and our subsidiaries Biohaven Therapeutics Ltd. (“Therapeutics”) and Kleo Acquisition, Inc. (“Merger Sub”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Kleo Pharmaceuticals, Inc. (“Kleo”) and Shareholder Representative Services LLC, which contemplates Merger Sub, subject to the terms and conditions set forth in the Merger Agreement, merging with and into Kleo, with Kleo surviving the merger as a wholly-owned subsidiary of the Company. The merger closed on January 4, 2021.
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In the merger, each share of Kleo common stock issued and outstanding immediately prior to the effective time of the merger was converted into the right to receive (i) approximately 0.007 of one of our common shares, rounded up to the nearest whole share, (ii) one contingent value right, as further described below, and (iii) certain other amounts to extent released from escrows established to provide for indemnification claims.
The merger values Kleo at approximately $20.0 million, exclusive of the value of the contingent value rights, and the Merger Agreement provides for approximately $1.0 million of holdbacks to provide for indemnification claims. Prior to the consummation of the merger, we owned approximately 41.9% of the outstanding shares of Kleo through our subsidiary Therapeutics, resulting in 115,836 of our common shares being issued to Kleo stockholders in the merger.
In the merger, each share of Kleo common stock received one contingent value right, representing the right to receive one dollar in cash 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 merger. The maximum amount payable pursuant to the contingent value rights is approximately $17.3 million.
The Merger Agreement contains various representations and warranties, covenants, indemnification obligations and other provisions customary for transactions of this nature. Kleo’s employees, other than its President and Chief Financial Officer, were retained as part of the merger.
Pursuant to the Merger Agreement, in March 2021 we filed a registration statement permitting Kleo stockholders to offer and sell the common shares of ours issued in the merger.
Yale MoDE Agreement
On January 1, 2021, we entered into a worldwide, exclusive license agreement for the development and commercialization of a novel Molecular Degrader of Extracellular Protein (MoDEs) platform based on ground-breaking research conducted in the laboratory of Professor David Spiegel at Yale University. Under the license agreement, we acquired exclusive, worldwide rights to Yale's intellectual property directed to its MoDEs platform.
Under the agreement, we paid Yale University an upfront cash payment of $1.0 million and 11,668 shares valued at $1.0 million. In addition, Yale University will be eligible to receive additional development milestone payments of up to $0.8 million and commercial milestone payments of up to $3.0 million.
Consulting Agreement with Moda Pharmaceuticals LLC
On January 1, 2021, we entered into a consulting services agreement with Moda Pharmaceuticals LLC to further the scientific and commercial advancement our technology, drug discovery platforms, product candidates and related intellectual property.
Under the agreement, we paid Moda an upfront cash payment of $2.7 million and 37,836 shares valued at $3.2 million. In addition, Moda Pharmaceutical will be eligible to receive additional development milestone payments of up to $81.6 million and commercial milestone payments of up to $30.2 million.

COVID-19 Update
We continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business.
We have taken numerous steps, and expect to continue to take further actions, in our approach to addressing the COVID-19 pandemic. For example, we implemented internal controls to effect a remote work environment and instructed most of our employees to work from home, and our incident management teams responded to changes in our work environment quickly and effectively. In April 2020, we announced a collaboration with Cove in order to facilitate telemedicine evaluation for migraine sufferers while patients are increasingly looking to remote evaluations during this time of unprecedented decreased access to routine office visits. We continue to monitor COVID-19 developments and regulatory and government actions.
To date, the effects of the COVID-19 pandemic have not had a material impact on our long-term activity. However, future developments remain uncertain and the extent to which the COVID-19 pandemic ultimately impacts our business, financial condition or results of operations will depend on a number of factors, including the magnitude and duration of the pandemic, the distribution, acceptance and effectiveness of COVID-19 vaccines and treatments, the duration of government measures to mitigate the pandemic and how quickly and to what extent normal economic and operating conditions can resume, all of which remain uncertain and difficult to predict. There remains risk that COVID-19 could have material adverse impacts on future revenue growth as well as overall profitability.

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Components of Our Results of Operations
Product Revenues, Net
We began to recognize revenue from product sales, net of rebates, chargebacks, discounts and other adjustments, in March 2020 in conjunction with the launch of our first product, NURTEC ODT. We will continue to evaluate trends related to revenue momentum for NURTEC ODT, including any discernible impacts of the COVID-19 pandemic. If our development efforts for our other product candidates are successful and result in regulatory approval, or additional license agreements with third parties, we may generate additional revenue in the future from product sales.
Cost of Goods Sold
Cost of goods sold includes direct and indirect costs related to the manufacturing and distribution of NURTEC ODT, including third-party manufacturing costs, packaging services, freight-in, third-party royalties payable on our net product revenues and amortization of intangible assets associated with NURTEC ODT.
Operating Expenses
Research and Development Expenses
Research and development 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; and
•payments made in cash, equity securities or other forms of consideration under third-party licensing agreements.
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, contract manufacturing organizations, 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 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, we expect that our research and development expenses will remain significant over the next several years as we increase personnel costs conduct 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;
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•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.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of personnel costs, including salaries, benefits and travel expenses for our executive, commercial, finance, business, commercial, corporate development and other administrative functions; and non-cash share-based compensation expense. Selling, general and administrative expenses also include facilities and other related expenses, including rent, depreciation, maintenance of facilities, insurance and supplies; professional fees for expenses incurred under agreements with third parties relating to the commercialization of NURTEC ODT; and for public relations, audit, tax and legal services, including legal expenses to pursue patent protection of our intellectual property.
We anticipate that our selling, general and administrative expenses, including payroll and related expenses, will remain significant in the future as we continue to expand our operations and organizational capabilities, continue to support our commercial activities associated with NURTEC ODT, 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.
Other Income (Expense)
Interest Expense
Interest Expense primarily consists of interest on our outstanding term loan with Sixth Street Specialty Lending, Inc., which includes interest expense on the outstanding loan balance, accretion of the debt discount and amortization of issuance costs. Our interest expense also includes implied interest on our finance leases associated with our commercial car fleet. We utilize the effective interest method to determine our interest expense on the term loan and finance leases and the straight-line method for the amortization of the debt issuance costs.
Interest Expense on Mandatorily Redeemable Preferred Shares
Interest expense on mandatorily redeemable preferred shares is being recognized in connection with the issuance of series A preferred shares and series B preferred shares pursuant to the Series A preferred share purchase agreement and Series B preferred shares forward contracts we entered into with RPI. Since we are required to redeem the series A preferred shares for two times (2x) the original purchase price in equal quarterly installments by December 31, 2024 and the series B preferred shares for one point seventy seven times (1.77x) the original purchase price in equal installments beginning on March 31, 2025 and ending December 31, 2030, we concluded that the Series A preferred shares and Series B preferred shares are mandatorily redeemable instruments and initial classified the preferred shares at their fair value as a liability. Interest expense on the mandatorily redeemable preferred shares represents the accretion of the carrying value of the preferred shares liability to its redemption value using the effective interest rate method.
Change in Fair Value of Derivatives
The fair value of the derivative liability recognized in connection with contingent payments under the Series A Preferred Share Agreement is determined using the with-and-without valuation method. As inputs into the valuation, we considered the type and probability of occurrence of certain events, the amount of the payments, the expected timing of certain events, and a risk-adjusted discount rate. In accordance with ASC 815, Derivatives and Hedging, the fair value of the derivative is recorded on the condensed consolidated balance sheet as a Series A preferred derivative liability with changes in fair value recorded in other income (expense) in the condensed consolidated statements of operations and comprehensive loss.
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The fair value of the derivative liability recognized in connection with the Series B Preferred Shares Forward Contracts is determined using discounted cash flow and Monte Carlo valuation methods. As inputs into the valuation, we considered the probability of occurrence of certain change of control events, the amount of the payments, the expected timing of certain events, and a risk-adjusted discount rate. In accordance with ASC 815, Derivatives and Hedging, the fair value of the derivative is recorded on the condensed consolidated balance sheet as a Series B preferred shares forward contact with changes in fair value recorded in other income (expense) in the condensed consolidated statements of operations and comprehensive loss.
Interest Expense on Liability Related to Sale of Future Royalties
We have accounted for the 2018 RPI Funding Agreement and a unit of accounting of the 2020 RPI Funding Agreement with RPI Trust both as liability financings, primarily because they have significant continuing involvement in generating the future revenue on which the royalties are based. The liabilities related to sale of future royalties and the related interest expense are measured based on the Company's current estimate of the timing and amount of future royalties expected to be paid over the estimated terms of the 2018 RPI Funding Agreement and 2020 RPI Funding Agreement. The liabilities are amortized using the effective interest rate method, resulting in recognition of interest expense over the estimated term of the agreement. Each reporting period, the Company assesses the estimated timing and amount of future expected royalty payments over the estimated terms. If there is a change to one of the estimates, the Company recognizes the impact to the liability’s amortization schedule and the related interest expense prospectively. The Company’s estimate of the amount of expected future royalties to be paid considers the probability of success of compounds not yet approved for sale, and market penetration rates, compliance rate, and net pricing of both NURTEC ODT and compounds not yet approved for sale. Additionally, the transaction costs associated with the liabilities will be amortized to interest expense over the estimated term of the 2018 RPI Funding Agreement and 2020 RPI Funding Agreement, respectively.
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 consolidated statement of operations and comprehensive loss and results in a corresponding adjustment to the carrying value of the equity method investment on our condensed consolidated balance sheet.
On January 4, 2021, the Company acquired the rest 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 of $5,261 on the condensed consolidated statement of operations and comprehensive loss as a result of remeasuring to fair value the existing equity interest in Kleo during the three months ended March 31,2021.
Provision for Income Taxes
As a company incorporated in the British Virgin Islands (“BVI”), we are principally subject to taxation in the BVI. Under the current laws of the BVI, tax on a company’s income is assessed at a zero percent tax rate. As a result, we have not recorded any income tax benefits from losses incurred in the BVI during each reporting period, and no net operating loss carryforwards will be available to us for those losses. We, and certain of our subsidiaries, have historically outsourced the research and development for our programs and commercial activities of NURTEC ODT under master services agreements with our wholly owned subsidiary, Biohaven Pharmaceuticals, Inc., a Delaware corporation (“BPI”). As a result of providing services under these agreements and profit from US commercial sales of NURTEC ODT, BPI was profitable during the six months ended June 30, 2021 and 2020, and BPI is subject to taxation in the United States.
In August 2020, we completed an intra-entity asset transfer of certain of our intellectual property to our Irish subsidiary. As a result of the transfer, we recorded a deferred tax asset of $875.0 million for the step up in tax basis received pursuant to Irish tax law. Based on our analysis of all available objective evidence, we concluded that it was more likely than not that the deferred tax asset from the intra-entity transfer will not be realized due to the lack of net operating income history of our subsidiary. Therefore, we established a full valuation allowance against our net deferred tax asset in Ireland.
We continue to maintain a valuation allowance against our US deferred tax assets. We periodically review our position and have determined that a full valuation allowance on these assets was appropriate due to excess research and development ("R&D") credit carryforwards as of June 30, 2021. We will continue to evaluate the need for a valuation allowance on our deferred tax assets until there is sufficient positive evidence to support the reversal of all or some portion of these allowances. We anticipate the commercialization of NURTEC ODT will result in future earnings and believe sufficient positive evidence may become available within the next 12 months to allow us to reach a conclusion that a significant portion, or all, of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and
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amount of the valuation allowance release is subject to change on the basis of the level of profitability that we are able to actually achieve.
In January 2021, we completed the acquisition of Kleo. The acquisition and inclusion of Kleo did not result in a material impact on the provision for income taxes or the effective tax rate for the three and six months ended June 30, 2021. We recorded a full valuation allowance against our Kleo US deferred tax assets and will periodically review our position and have determined that a full valuation allowance on these assets was appropriate due to Kleo’s cumulative loss history. We will continue to evaluate the need for a valuation allowance on our deferred tax assets until there is sufficient positive evidence to support the reversal of all or some portion of these allowances.

Results of Operations
Comparison of the Three Months Ended June 30, 2021 and 2020
The following tables summarize our results of operations for the three months ended June 30, 2021 and 2020:
Three Months Ended June 30,
  2021 2020 Change
 In thousands
Product revenue, net $ 92,933  $ 9,698  $ 83,235 
Cost of goods sold 17,339  3,058  14,281 
Gross profit 75,594  6,640  68,954 
Operating expenses:  
Research and development 77,428  42,425  35,003 
Selling, general and administrative 170,057  124,802  45,255 
Total operating expenses 247,485  167,227  80,258 
Loss from operations (171,891) (160,587) (11,304)
Other income (expense):  
Interest expense (7,836) (172) (7,664)
Interest expense on mandatorily redeemable preferred shares (8,042) (6,993) (1,049)
Interest expense on liability related to sale of future royalties (14,499) (11,570) (2,929)
Change in fair value of derivatives (1,490) 650  (2,140)
Gain (loss) from equity method investment —  (1,485) 1,485 
Other expense, net (3,051) (119) (2,932)
Total other income (expense), net (34,918) (19,689) (15,229)
Loss before provision for income taxes (206,809) (180,276) (26,533)
Provision for income taxes 4,350  658  3,692 
Net loss (211,159) (180,934) (30,225)
Less: Net loss attributable to non-controlling interests (540) —  (540)
Net loss attributable to Biohaven Pharmaceutical Holding Company Ltd. $ (210,619) $ (180,934) $ (29,685)

Product revenue, net
Net product revenue was $92.9 million for the three months ended June 30, 2021, compared to $9.7 million for the three months ended June 30, 2020. The increase of $83.2 million in net product revenues is due to both increased NURTEC ODT sales volume and improvements in net price realization due to decreases in sales allowances during the three months ended June 30, 2021, compared to the three months ended June 30, 2020. The Company began selling NURTEC ODT in March 2020. Sales allowances and accruals mostly consisted of patient affordability programs, distribution fees and rebates.
Cost of Goods Sold
Cost of goods sold was $17.3 million for the three months ended June 30, 2021, compared to $3.1 million for the three months ended June 30, 2020. Our cost of goods sold is related to royalties on net sales payable to BMS under a license agreement (see Note 15 "Commitments and Contingencies" to our condensed consolidated financial statements), manufacturing costs for NURTEC ODT, certain distribution costs and amortization of intangible assets related to milestone payments to BMS
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and Catalent, Inc. ("Catalent"). See Note 13 "License and Other Agreements" to our condensed consolidated financial statements for more information on the BMS and Catalent agreements. The increase of 14.3 million in costs of goods sold was primarily due to increased NURTEC ODT sales during the three months ended June 30, 2021, compared to the three months ended June 30, 2020, which had no material manufacturing costs included as all of the costs were incurred prior to FDA approval, and accordingly expensed.
Research and Development Expenses
Three Months Ended June 30,
  2021 2020 Change
In thousands
Direct research and development expenses by program:      
Rimegepant $ 13,976  $ 8,090  $ 5,886 
Troriluzole 13,068  8,293  4,775 
Zavegepant 11,470  6,094  5,376 
Verdiperstat 8,613  5,087  3,526 
BHV-5000 38  98  (60)
Unallocated research and development costs:
Personnel related (including non-cash share-based compensation) 19,919  12,868  7,051 
Preclinical research programs 4,706  194  4,512 
Other 5,638  1,701  3,937 
Total research and development expenses $ 77,428  $ 42,425  $ 35,003 

R&D expenses, including non-cash share-based compensation costs, were $77.4 million for the three months ended June 30, 2021, compared to $42.4 million for the three months ended June 30, 2020. The increase of $35.0 million was primarily due to increase in program expenses of $5.9 million, $4.8 million, $4.5 million, $3.5 million, and $15.4 million for rimegepant, troriluzole, preclinical research programs, verdiperstat, and zavegepant, respectively, and an increase of $7.1 million in personnel costs. The increase in program expenses was partially offset by a reduction in our obligation to perform R&D services of $10.0 million for zavegepant. Non-cash share-based compensation expense was $9.3 million for the three months ended June 30, 2021, an increase of $2.8 million as compared to the same period in 2020.

Selling, General and Administrative Expenses
SG&A expenses, including non-cash share-based compensation costs, were $170.1 million for the three months ended June 30, 2021, compared to $124.8 million for the three months ended June 30, 2020. The increase of $45.3 million was primarily due to increases in spending to support increased commercial sales of NURTEC ODT for the three months ended June 30, 2021, compared to the three months ended June 30, 2020. Less than half of the SG&A expense, was for commercial organization personnel costs, excluding non-cash share-based compensation expense. Non-cash share-based compensation expense was $16.3 million for the three months ended June 30, 2021, an increase of $11.0 million as compared to the same period in 2020. The increase in non-cash share-based compensation expense was primarily due to the amortization of the Company's annual equity incentive awards that were granted in the first quarter of 2021.
Other Income (Expense), Net
Other income (expense), net was a net expense of $34.9 million for the three months ended June 30, 2021, compared to net expense of $19.7 million for the three months ended June 30, 2020. The increase of $15.2 million in net expense was primarily due to the interest expense on our term loan with Sixth Street, drawn in the third quarter of 2020, and an increase in the interest expense recognized on our liability related to sale of future royalties in the three months ended June 30, 2021.
Provision for Income Taxes
We recorded a provision for income taxes of $4.4 million for the three months ended June 30, 2021, compared to a provision for income taxes of $0.7 million for the three months ended June 30, 2020. The increase was primarily attributable to the Company's profitable operations in the United States in 2021.
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Comparison of the Six Months Ended June 30, 2021 and 2020
The following tables summarize our results of operations for the six months ended June 30, 2021 and 2020:
Six Months Ended June 30,
2021 2020 Change
In thousands
Product revenue, net $ 136,756  $ 10,849  $ 125,907 
Cost of goods sold 30,201  3,482  26,719 
Gross profit 106,555  7,367  99,188 
Operating expenses:
Research and development 184,539  98,495  86,044 
Selling, general and administrative 329,580  220,403  109,177 
Total operating expenses 514,119  318,898  195,221 
Loss from operations (407,564) (311,531) (96,033)
Other income (expense):
Interest expense (15,567) (227) (15,340)
Interest expense on mandatorily redeemable preferred shares (15,985) (12,554) (3,431)
Interest expense on liability related to sale of future royalties (28,007) (19,995) (8,012)
Change in fair value of derivatives (1,700) (5,131) 3,431 
Gain (loss) from equity method investment 5,261  (2,865) 8,126 
Other (4,751) (216) (4,535)
Total other income (expense), net (60,749) (40,988) (19,761)
Loss before provision for income taxes (468,313) (352,519) (115,794)
Provision for income taxes 8,174  1,352  6,822 
Net loss (476,487)