Biohaven (BHVN): Assessing Valuation After FDA Rejects VYGLXIA and Strategic Restructuring

Biohaven (BHVN) shares dropped this week after the FDA rejected its New Drug Application for VYGLXIA targeting spinocerebellar ataxia. The agency cited concerns over the supporting study design and real-world evidence.

In response, Biohaven announced it will shift strategy by reducing its annual research spending and pausing or delaying non-priority projects. The company aims to safeguard resources for key clinical assets in its pipeline.

See our latest analysis for Biohaven.

Biohaven’s share price plunged 40% in a single day following the FDA’s rejection, with the one-year total shareholder return now at -84%. Momentum has clearly faded compared to earlier optimism as investors reassess the company’s prospects amid its pipeline reprioritization and ongoing restructuring.

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With sentiment at rock bottom and shares trading far below analyst targets, does Biohaven now represent a contrarian buying opportunity, or is the market rightly discounting future growth prospects given the company’s challenges?

Price-to-Book Ratio of 6.6x: Is it Justified?

Biohaven trades at a price-to-book ratio of 6.6x, significantly above both the US biotech industry average of 2.4x and the average for its direct peers at 4.4x. With shares recently closing at $8.34, this suggests the market is currently valuing Biohaven’s assets at a premium despite the company’s recent setbacks.

The price-to-book multiple measures how much investors are willing to pay for each dollar of net assets (assets minus liabilities) on the company’s balance sheet. For early-stage or unprofitable biotech firms, a high price-to-book ratio can reflect optimism about future drug pipelines or expected revenue growth.

However, Biohaven is unprofitable, has minimal revenues, and is not expected to achieve profitability in the next three years. Its price-to-book ratio stands well above both direct peers and the broader sector. This signals investors might be overpaying relative to underlying assets, unless near-term breakthroughs meaningfully improve the outlook. There is currently no fair ratio available to establish where the market could recalibrate this multiple.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Book Ratio of 6.6x (OVERVALUED)

However, risks remain, such as slower than expected turnaround or clinical disappointments, which could further challenge investor confidence in Biohaven’s recovery story.

Find out about the key risks to this Biohaven narrative.

Build Your Own Biohaven Narrative

If you think there’s more to the story, or you want to examine the numbers firsthand and shape your own view, it takes less than three minutes to build your own narrative. Do it your way

A great starting point for your Biohaven research is our analysis highlighting 1 key reward and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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