Biohaven Ltd

Item 1A. Risk Factors

Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. Our risk factors have not changed materially from those described in "Part I, Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 3, 2025, except for the risk factors noted below.

The terms of the Note Purchase Agreement (as defined below) and our level of indebtedness could adversely affect our business and financial condition and limit our ability to plan for, or respond to, changes in our business.

On April 28, 2025, we and our subsidiaries, including Biohaven Therapeutics Ltd. (the Issuer), entered into a Note Purchase Agreement (the Note Purchase Agreement) with the purchasers party thereto (the Purchasers) and Beetlejuice SA LLC, an affiliate of Oberland Capital Management LLC, as purchaser agent. Pursuant to the Note Purchase Agreement, the Purchasers purchased senior secured notes from the Issuer in an initial tranche for an aggregate purchase price of $250.0 million. In addition, the Purchasers may purchase additional senior secured notes from the Issuer in a second tranche in up to three purchases on or before June 30, 2026 for an aggregate purchase price of $150.0 million, subject to the satisfaction of certain conditions, including the receipt of approval from the FDA for troriluzole. The Purchasers may also purchase, at the Issuers option and subject to the approval of each Purchaser agreeing to participate therein, in its sole discretion, additional notes from the Issuer in up to four purchases for an aggregate purchase price of $200.0 million. In addition to the approximately $250.0 million of indebtedness that we have incurred under the Note Purchase Agreement, we may incur a significant amount of additional indebtedness under the Note Purchase Agreement, which could adversely affect our business.

As consideration under the Note Purchase Agreement, the Purchasers have the right to receive payments from us equal to, initially, 6.25% of the global net sales of troriluzole, subject to increase or decrease, following December 31, 2030, depending on whether the aggregate payments made to the Purchasers as of that date equal or exceed the Total Funded Amount (as defined in the Note Purchase Agreement). We are also obligated to pay to the Purchasers a milestone payment equal to 35% of the Funded Amount (as defined in the Note Purchase Agreement) upon the approval by the FDA or EMA of troriluzole or our other products. In addition, if the aggregate payments to the Purchasers as of December 31, 2030 do not equal or exceed the amount of the Total Funded Amount, then we will be obligated to make a one-time payment to the Purchasers in an amount equal to 100% of the Total Funded Amount as of December 31, 2030, less the aggregate amount of our previous payments, excluding any Milestone Payments made for approvals of product candidates other than troriluzole, to the Purchasers as of December 31, 2030. See Note 6, Notes Payable, to the accompanying condensed consolidated financial statements included in this Form 10-Q for more information about the Note Purchase Agreement.

Our level of indebtedness could affect our business in the following ways, among other things:

make it more difficult for us to satisfy our contractual and commercial commitments;

require us to use a substantial portion of our cash flow from operations to make payments under the Note Purchase Agreement, which would reduce funds available for working capital, capital expenditures and other general corporate purposes;

limit our ability to complete acquisitions and limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and other investments or general corporate purposes;

heighten our vulnerability to economic downturns or downturns in our business or our industry;

place us at a disadvantage compared to those of our competitors that may have proportionately less indebtedness;

limit managements discretion in operating our business; and

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limit our flexibility in planning for, or reacting to, changes in our business, the industry in which we operate or the general economy.

The Note Purchase Agreement could have important negative consequences to holders of our common shares. To secure our obligations under the Note Purchase Agreement, we and certain of our subsidiaries have granted the Purchaser Agent, for the benefit of the Purchasers, a security interest in our cash and equity interests and in specific assets related to troriluzole. Failure to pay amounts owed to the Purchasers when due would result in a default under the Note Purchase Agreement and could result in foreclosure on all or substantially all of those assets, which would have a material adverse effect on our business and results of operations. In addition, payment requirements under the Note Purchase Agreement will increase our cash outflows. Our business may not generate cash flows from operations in the future that are sufficient to service our indebtedness, pay the revenue interest liability, make necessary capital expenditures and support our growth strategies. If we are unable to generate such cash flows, we may be required to pursue one or more alternatives, such as obtaining additional equity capital on terms that may be onerous or highly dilutive, selling assets or restructuring our indebtedness. We may have to relinquish valuable rights to troriluzole, our intellectual property or future revenue streams, or grant licenses on terms that are not favorable to us. In addition, an increase in the royalty rate on global net sales of troriluzole under the Note Purchase Agreement could result in additional payments by us to the Purchasers and, as a result, harm our cash flows, financial condition and results of operations. Our ability to refinance our indebtedness will depend on the capital and credit markets and our financial condition at such time. If prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon refinancing, then the expense relating to the refinancing would increase. Any of the foregoing risks could materially adversely affect our financial condition, cash flows and results of operations.

The Note Purchase Agreement contains affirmative and negative covenants and events of default, which may prevent us from capitalizing on business opportunities and taking certain corporate actions, and includes a Put Option (as defined below) in favor of the Purchasers, which could have a material adverse effect on our business, financial condition and results of operations.

The Note Purchase Agreement contains affirmative and negative covenants and events of default, including covenants and restrictions that, among other things, restrict our ability to incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into certain transactions with affiliates, pay dividends or make distributions, repurchase stock and enter into restrictive agreements, in each case, subject to certain exceptions set forth in the Note Purchase Agreement. AdditionallyFor example, the Note Purchase Agreement includes a financial statement delivery covenant and in the event that our audited financial statements, are subject to any qualification, emphasis of matter or statement as to going concern or scope of audit, subject to certain exceptions, we would be in breach of our financial statement delivery covenant. Additionally, the Purchasers have an option (the Put Option) to terminate the Note Purchase Agreement and to require us to repurchase the Notes upon enumerated events such as payment defaults, covenant defaults, material breaches of representations and warranties, cross defaults to material debt, bankruptcy and insolvency defaults, material judgment defaults, a key man event or a change of control. The Purchasers right to repayment under the Note Purchase Agreement is senior to the rights of the holders of our common shares. If the Purchasers were to exercise the Put Option or otherwise declare an event of default under the Note Purchase Agreement, that could significantly harm our business, financial condition and results of operations and could cause the price of our common shares to decline.