Acquisition of Biohaven Pharmaceuticals, Inc.

3 Months Ended

Mar. 31, 2017

Acquisition of Biohaven Pharmaceuticals, Inc.

Acquisition of Biohaven Pharmaceuticals, Inc.

16.  Acquisition of Biohaven Pharmaceuticals, Inc.

On December 31, 2016, the Company entered into stock purchase agreements with each of the stockholders of BPI, acquiring 100% of the issued and outstanding shares of BPI for aggregate purchase consideration of $595. Prior to the acquisition, the Company was deemed to have had a variable interest in BPI, and BPI was deemed to be a VIE of which the Company was the primary beneficiary. As a result, the Company has consolidated the results of BPI since the Company’s incorporation in September 2013, and, prior to the acquisition of BPI, recognized a non-controlling interest in its consolidated balance sheet representing 100% of the capital stock of BPI not owned by the Company. The three founders of BPI, each of whom beneficially owned one-third of the equity of BPI, also serve as the Company’s Chairman of the board of directors, Chief Executive Officer, and Chief Medical Officer, respectively (see Note 15).

The Company funded the acquisition through the issuance of promissory notes to each of the former stockholders of BPI. The notes are payable in five annual payments, the first four of which are interest only, with the final payment to include the principal balance outstanding plus any accrued and unpaid interest. The notes bear interest at a rate of 4.5% per annum and mature on December 31, 2021. The notes would become immediately due and payable upon specified events, including immediately prior to the consummation of the IPO of the Company’s common shares or upon the occurrence of a change of control of the Company. There are no affirmative, negative or financial covenants associated with the notes. In May 2017, in connection with the completion of the IPO, the notes became immediately due and payable, and the Company paid the notes, including principal and unpaid interest, in full (see Note 17).

Because the Company consolidated BPI as a VIE prior to the acquisition, the acquisition of all of the capital stock of BPI did not result in a change of control for accounting purposes and was accounted for as an equity transaction. Accordingly, as of the acquisition date, the $86 carrying value of the non-controlling interest on December 31, 2016 was derecognized and the difference between the carrying value of the non-controlling interest of $86 and the purchase price of $595 was recorded as a $509 reduction to additional paid-in capital. There were no changes during the three months ended March 31, 2017.

For the three months ended March 31, 2016, the Company recorded a net loss attributable to non-controlling interests of $35 when the Company consolidated BPI as a VIE.