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Related Party Transactions
 9 Months Ended
Sep. 30, 2023
Related Party Transactions [Abstract]  
Related Party Transactions Related Party Transactions
Relationship with the Former Parent
Upon the effectiveness of the Separation on October 3, 2022, the Former Parent ceased to be a related party of the Company.
On October 3, 2022, the Company entered into agreements with the Former Parent in connection with the Separation, including the following:
Transition Services Agreement. The Company entered into a Transition Services Agreement with the Former Parent (the “Transition Services Agreement”) under which the Company or one of its affiliates provides the Former Parent, and the Former Parent or one of its affiliates provides the Company, with certain transition services for a limited time to ensure an orderly transition following the Spin-Off. The services that the Company and the Former Parent agreed to provide to each other under the Transition Services Agreement include certain finance, information technology, clinical study support, human resources and compensation, facilities, financial reporting and accounting and other services. The Company pays the Former Parent, and the Former Parent pays the Company, for any such services received by the Former Parent or the Company, as applicable, at agreed amounts as set forth in the Transition Services Agreement.
Amounts received in connection with the Transition Services Agreement are recorded as other income on the condensed consolidated statement of operations and comprehensive loss, as they are outside of the normal operating business of the Company. For the three and nine months ended September 30, 2023, the Company recorded $1,233 and $6,753 in other income reflecting transition services provided to the Former Parent. As of September 30, 2023, the Company had a receivable of $1,840 included in other current assets on the condensed consolidated balance sheet relating to transition services provided to the Former Parent.
United States Distribution Services Agreement. The Company entered into a United States Distribution Services Agreement with the Former Parent, pursuant to which the Company continued to serve as the Former Parent’s distributor and agent for the distribution of the pharmaceutical product Nurtec ODT in the United States for a limited period of time following the Spin-Off, which has concluded. Under the Distribution Services Agreement, the Former Parent and Pfizer Inc. have agreed to indemnify the Company for, among other things, losses resulting from the conduct of the distribution business or actions taken at the direction of the Former Parent.
As the Company was acting as an agent of the Former Parent for services performed under the Distribution Services Agreement, no amounts for revenues or expenses relating to the services performed
thereunder are included on the Company's condensed consolidated financial statements. As of September 30, 2023, the Company recorded restricted cash held on behalf of Former Parent of $28 and Due to Former Parent of $28 on the condensed consolidated balance sheet primarily relating to cash held in connection with the execution of the Distribution Services Agreement which is legally payable to the Former Parent.
Outsourcing & Employee Transfer Agreements. The Company entered into Outsourcing & Employee Transfer Agreements, one with Pfizer Inc., Merger Sub, the Former Parent and Biohaven Pharmaceuticals, Inc. (“U.S. Employer”), and the other with Pfizer, Merger Sub, the Former Parent, and BioShin (Shanghai) Consulting Services Co., Ltd. (“Chinese Employer”), pursuant to which the Chinese Employer and the U.S. Employer, among other things, provided Pfizer with the services of, and remained the employers of, certain of their employees for the period of time immediately following the Spin-Off through December 31, 2022. During such period, Pfizer or one of its affiliates paid the U.S. Employer for employee-related expenses for its employees (including the cost of salary and wages) and paid the Chinese Employer a service fee based on employee-related expenses for its employees (including the cost of salary and wages).
Amounts received in connection with the Outsourcing & Employee Transfer Agreements are recorded against their related operating expenses as they represent reimbursements for operating expenses incurred by the Company on behalf of the Former Parent.
Relationship with the Former Parent prior to the Separation
Pursuant to the Distribution Agreement, immediately prior to the Separation the Former Parent made a cash contribution to the Company which resulted in a cash balance of approximately $257,799 as of October 3, 2022.
Prior to the Separation, the Company did not historically operate as a standalone business and the condensed consolidated financial statements were derived from the consolidated financial statements and accounting records of the Former Parent. The following disclosure summarizes activity between the Company and the Former Parent prior to the Separation, including the affiliates of the Former Parent that were not part of the Spin-Off.
Cost Allocations
The condensed consolidated financial statements for periods prior to the Separation reflect allocations of certain expenses from the financial statements of the Former Parent, including research and development expenses and general and administrative expenses. These allocations include, but are not limited to, executive management, employee compensation and benefits, facilities and operations, information technology, business development, financial services (such as accounting, audit, and tax), legal, insurance, and non-cash share-based compensation.
For periods prior to the Separation, these allocations to the Company are reflected in the condensed consolidated statement of operations and comprehensive loss as follows:
Three Months Ended September 30,Nine Months Ended September 30,
20222022
Research and development$23,048 $84,772 
General and administrative 9,676 43,053 
Total$32,724 $127,825 
Management believes these cost allocations are a reasonable reflection of services provided to, or the benefit derived by, the Company during the period presented. The allocations may not, however, be indicative of the actual expenses that would have been incurred had the Company operated as a standalone public company. Actual costs that may have been incurred if the Company had been a standalone public company would depend on a number of factors, including the chosen organizational structure, what corporate functions the Company might have performed directly or outsourced and strategic decisions the Company might have made in areas such as executive management, legal and other professional services, and certain corporate overhead functions.
Non-Cash Share-Based Compensation
Prior to the Separation, Biohaven employees participated in the Former Parent’s non-cash share-based compensation plans, the costs of which have been allocated to the Company and recorded in research and development and general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss.
Net Transfers From Former Parent
Net transfers from Former Parent represent the net effect of transactions between the Company and the Former Parent prior to the Separation. The components of net transfers from Former Parent are as follows:
Three Months Ended September 30,Nine Months Ended September 30,
20222022
General financing activities$111,816 $187,519 
Corporate cost allocations, excluding share-based compensation15,727 49,898 
Net transfers from Former Parent as reflected in the Condensed Consolidated Statement of Cash Flows127,543 237,417 
Share-based compensation16,997 77,927 
Issuance of Former Parent common shares to repurchase non-controlling interest in a subsidiary— 60,000 
Issuance of Former Parent common shares as payment for IPR&D asset acquisition— 58,747 
Issuance of Former Parent common shares as payment for license and consulting agreements— 1,779 
Other non-cash adjustments
(469)(1,173)
Net transfers from Former Parent as reflected in Note 7, "Shareholders' Equity"
$144,071 $434,697 
Related Party Agreements
License Agreement with Yale University
On September 30, 2013, the Company entered into the Yale Agreement with Yale University (see Note 10). The Company’s Chief Executive Officer is one of the inventors of the patents that the Company has licensed from Yale University and, as such, is entitled to a specified share of the glutamate product-related royalty revenues that may be received by Yale University under the Yale Agreement.
In January 2021, the Company entered into the Yale MoDE Agreement with Yale University (see Note 10 for details). Under the license agreement, the Company acquired exclusive, worldwide rights to Yale University's intellectual property directed to its MoDE platform. As part of consideration for this license, the Company paid Yale University an upfront cash payment of $1,000 and 11,668 common shares of the Former Parent valued at approximately $1,000. Under the Yale MoDE Agreement, the Company entered into the Yale MoDE SRA (see Note 10 for details), which included funding of up to $4,000 over the life of the agreement. In May 2023, the Company entered into an additional sponsored research agreement with Yale University (the "2023 Yale SRA"), which includes funding of up to $612 over the life of the agreement.
For the three and nine months ended September 30, 2023, the Company recorded $614 and $2,313, respectively, in research and development expense, including certain administrative expenses, related to the
Yale MoDE Agreement and the Yale MoDE SRA, the Yale Agreement, and the 2023 Yale SRA (the "Yale Agreements"). For the three and nine months ended September 30, 2022, the Company recorded $463 and $2,750, respectively, in research and development expense, including certain administrative expenses, related to the Yale Agreements. As of September 30, 2023, the Company did not owe any amounts to Yale University.