Biohaven Ltd. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to a company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level. Management's Report on Internal Control over Financial Reporting Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024 based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on that evaluation, management has concluded that the Company's internal control over financial reporting was effective as of December 31, 2024. 105 Table of Contents Report of Independent Registered Public Accounting Firm The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by Ernst & Young LLP., an independent registered public accounting firm, as stated in their report, which is included below. Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Biohaven Ltd. Opinion on Internal Control Over Financial Reporting We have audited Biohaven Ltd.’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Biohaven Ltd. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated March 3, 2025 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Boston, Massachusetts March 3, 2025 106 Table of Contents Changes in Internal Controls over Financial Reporting There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION During the year ended December 31, 2024, none of our directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408 of Regulation S-K. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 107 Table of Contents PART III We will file a definitive Proxy Statement for our 2025 Annual Meeting of Shareholders (the "2025 Proxy Statement") with the SEC, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain information required by Part III has been omitted under General Instruction G(3) to Form 10 ‑ K. Only those sections of the 2025 Proxy Statement that specifically address the items set forth herein are incorporated by reference. Item 10. Directors, Executive Officers and Corporate Governance The information required by this Item is incorporated herein by reference to the information that will be contained in our 2025 Proxy Statement under the captions "Information Regarding the Board of Directors and Corporate Governance," "Insider Trading Policy," "Election of Directors," and "Executive Officers." Item 11. Executive Compensation The information required by this Item is incorporated herein by reference to the information that will be contained in the 2025 Proxy Statement under the captions "Executive Compensation" and "Director Compensation." Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters The information required by this Item is incorporated herein by reference to the information that will be contained in the 2025 Proxy Statement under the captions "Security Ownership of Certain Beneficial Owners and Management" and "Securities Authorized for Issuance under Equity Compensation Plans." Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this Item is incorporated herein by reference to the information that will be contained in the 2025 Proxy Statement under the captions "Transactions with Related Persons" and "Independence of the Board of Directors." Item 14. Principal Accountant Fees and Services The information required by this Item is incorporated herein by reference to the information that will be contained in the 2025 Proxy Statement under the caption "Ratification of Selection of Independent Auditors." 108 Table of Contents PART IV Item 15. Exhibit and Financial Statement Schedules a. The following documents are filed as part of this report: (1) Financial Statements: The financial statements required by this item are submitted in a separate section beginning on page F-1 of this report. (2) Financial Statement Schedules: All other financial statement schedules have been omitted because they are not applicable, not required or the information required is shown in the consolidated financial statements or the notes thereto. (3) Exhibits. Exhibit Number Description of Document 2.1 Separation and Distribution Agreement, dated as of May 9, 2022, by and among Pfizer Inc., Bulldog (BVI) Ltd. and Biohaven Pharmaceutical Holding Company Ltd. (incorporated by reference to Exhibit 2.1 to the Company's Form 10 (File No. 001-41477) filed on August 10, 2022) . 2.2 Agreement and Plan of Merger, dated as of May 9, 2022, by and among Pfizer Inc., Bulldog (BVI) Ltd. and Biohaven Pharmaceutical Holding Company Ltd. (incorporated by reference to Exhibit 2.2 to the Company's Form 10 (File No. 001-41477) filed on August 10, 2022). 2.3 # Membership Interest Purchase Agreement, dated as of February 24, 2022, by and among Biohaven Therapeutics LTD., Knopp Biosciences LLC, Channel Biosciences, LLC and Biohaven Pharmaceutical Holding Company Ltd., solely for the purpose of Section 9.14 (incorporated by reference to Exhibit 2.3 to the Company's Form 10 (File No. 001-41477) filed on August 10, 2022). 2.4 # Amendment to Membership Interest Purchase Agreement, dated as of May 1, 2024, by and among the Company, BTL, BPI and Knopp (incorporated by reference to Exhibit 2.1 to the C ompany's Form 10- Q (F ile No. 001-41477) filed on August 9, 2024 ). 3.1 Amended & Restated Memorandum and Articles of Association of Biohaven Ltd. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (File No. 001-41477) filed on October 3, 2022). 4.1 # Warrant, dated as of May 1, 2024, by and between the Company and Knopp ( incorporated by reference to Exhibit 4 .1 to the Company's Form 10-Q (File No. 001-41477) filed on August 9, 2024 ) . 10.1 # Amended and Restated Agreement, by and between the Registrant and Yale University, dated as of May 6, 2019 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K (File No. 001-41477) filed on October 3, 2022). 10.2 # License Agreement, by and between the Registrant and AstraZeneca AB, dated as of September 4, 2018 (incorporated by reference to Exhibit 10.2 to the Company's Form 10 (File No. 001-41477) filed on August 10, 2022). 10.3 # License Agreement between Biohaven Therapeutics LTD. and Bristol-Myers Squibb Company, dated as of December 23, 2021 (incorporated by reference to Exhibit 10.3 to the Company's Form 10 (File No. 001-41477) filed on August 10, 2022). 10.4 # ALS Biopharma Agreement, by and among the registrant, ALS Biopharma, LLC and Fox Chase Chemical Diversity Center Inc., dated as of August 10, 2015 (incorporated by reference to Exhibit 10.4 to the Company's Form 10 (File No. 001-41477) filed on August 10, 2022). 10.5 Amendment and Assignment, by and among the Registrant, ALS Biopharma, LLC, Fox Chase Chemical Diversity Center and Biohaven Therapeutics Ltd, dated as of May 29, 2019 (incorporated by reference to Exhibit 10.5 to the Company's Form 10 (File No. 001-41477) filed on August 10, 2022). 10.6 + Employment Agreement dated May 9, 2017 by and between Biohaven Pharmaceuticals, Inc. and Vlad Coric (incorporated by reference to Exhibit 10.6 to the Company's Form 10 (File No. 001-41477) filed on August 10, 2022). 10.7 + Employment Agreement, dated December 8, 2021, between Biohaven Pharmaceuticals, Inc. and Matthew Buten (incorporated by reference to Exhibit 10.7 to the Company's Form 10 (File No. 001-41477) filed on August 10, 2022). 10.8 + Employment Agreement dated February 1, 2014 by and between Biohaven Pharmaceuticals, Inc. and Kimberly A. Gentile (incorporated by reference to Exhibit 10.9 to the Company's Form 10 (File No. 001-41477) filed on August 10, 2022). 10.9 + 2022 Equity Incentive Plan (incorporated by reference to Exhibit 4.2 to Company’s Registration Statement on Form S-8 filed on October 11, 2022). 10.10 + Form of Restricted Share Unit Grant Notice and Restricted Share Unit Award Agreement under 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.12 to the Company's Form 10 (File No. 001-41477) filed on September 7, 2022). 10.11 + Form of Share Option Grant Notice and Share Option Agreement under 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.13 to the Company's Form 10 (File No. 001-41477) filed on September 7, 2022). 109 Table of Contents 10.12 + 2022 Employee Share Purchase Plan (incorporated by reference to Exhibit 4.3 to Company’s Registration Statement on Form S-8 filed on October 11, 2022). 10.13 + Form of Employment Agreement by and between Biohaven Ltd. and Vladimir Coric (incorporated by reference to Exhibit 10.16 to the Company's Form 10 (File No. 001-41477) filed on September 7, 2022). 10.14 + Form of Employment Agreement by and between Biohaven Ltd. and Matthew Buten (incorporated by reference to Exhibit 10.17 to the Company's Form 10 (File No. 001-41477) filed on September 7, 2022). 10.15 + Amended and Restated Offer of Employment, by and between Biohaven Pharmaceuticals, Inc. and Bruce Car (Incorporated by reference to Exhibit 10.18 to the Company's Form 10-K (File No. 001-41477) filed on March 23, 2023). 10.16 # Development and License Agreement, dated as of March 21, 2023, by and between Hangzhou Highlightll Pharmaceutical Co. Ltd. and Biohaven Therapeutics LTD. (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q (File No. 001-41477) filed on May 12, 2023). 10.17 # Amendment to Development and License Agreement dated March 21, 2023, dated as of April 14, 2023, by and between Hangzhou Highlightll Pharmaceutical Co. Ltd. and Biohaven Therapeutics LTD. (incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q (File No. 001-41477) filed on May 12, 2023). 10.18 + Form of Nonstatutory Share Option Grant Notice (Early Exercise) and Share Option Agreement under the 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q (File No. 001-41477) filed on May 12, 2023). 10.19 + Form of Amendment to Share Option Grant Notice and Option Agreement under the 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q (File No. 001-41477) filed on May 12, 2023). 10.20 # Second Amendment to Development and License Agreement dated March 21, 2023, dated as of December 10, 2023, by and between Hangzhou Highlightll Pharmaceutical Co. Ltd. and Biohaven Therapeutics LTD. (Incorporated by reference to Exhibit 10.22 to the Company's Form 10-K (File No. 001-41477) filed on February 29, 2024). 19 Insider Trading Policy. 21.1 Subsidiaries of the Registrant. 23.1 Consent of Ernst & Young LLP. 24.1 Power of Attorney (contained on signature page hereto). 31.1 Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act. 31.2 Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act. 32.1 * Certifications of Principal Executive Officer and Principal Financial Officer under Section 906 of the Sarbanes-Oxley Act. 97 Incentive Compensation Recovery Policy (Incorporated by reference to Exhibit 97 to the Company's Form 10-K (File No. 001-41477) filed on February 29, 2024). 101 The following materials from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2024 formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statements of Shareholders' Equity, (v) the Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements, and (vi) Cover Page, tagged as blocks of text. 104 The cover page from the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, formatted in Inline XBRL (included as Exhibit 101). _______________________________________________________________________________ # Portions of this exhibit (indicated by asterisks) have been omitted as such information is (i) not material and (ii) would likely cause competitive harm to the Registrant if publicly disclosed. + Indicates management contract or compensatory plan. * These certifications are being furnished solely to accompany this Annual Report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing. Item 16. Form 10-K Summary Not applicable. 110 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BIOHAVEN LTD. Dated: March 3, 2025 By: /s/ VLAD CORIC, M.D. Vlad Coric, M.D. Chief Executive Officer (On behalf of the Registrant and as the Principal Executive Officer) By: /s/ MATTHEW BUTEN Matthew Buten Chief Financial Officer (Principal Financial Officer) KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Vlad Coric as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this Annual Report on Form 10-K of Biohaven Ltd., and any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. 111 Table of Contents Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ VLAD CORIC, M.D. Chief Executive Officer and Director (Principal Executive Officer) March 3, 2025 Vlad Coric, M.D. /s/ MATTHEW BUTEN Chief Financial Officer (Principal Financial Officer) March 3, 2025 Matthew Buten /s/ GEORGE C. CLARK Chief Accounting Officer (Principal Accounting Officer) March 3, 2025 George C. Clark /s/ GREGORY H. BAILEY, M.D. Director March 3, 2025 Gregory H. Bailey, M.D. /s/ JOHN W. CHILDS Director March 3, 2025 John W. Childs /s/ JULIA P. GREGORY Director March 3, 2025 Julia P. Gregory /s/ MICHAEL HEFFERNAN Director March 3, 2025 Michael Heffernan /s/ ROBERT J. HUGIN Director March 3, 2025 Robert J. Hugin /s/ KISHEN MEHTA Director March 3, 2025 Kishen Mehta /s/ IRINA ANTONIJEVIC Director March 3, 2025 Irina Antonijevic 112 Table of Contents Biohaven Ltd. Financial Statements For the Years Ended December 31, 2024, 2023 and 2022 Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 2 Consolidated Balance Sheets 4 Consolidated Statements of Operations 5 Consolidated Statements of Comprehensive Loss 6 Consolidated Statements of Shareholders' Equity 7 Consolidated Statements of Cash Flows 8 Notes to Consolidated Financial Statements 9 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Biohaven Ltd. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Biohaven Ltd. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 3, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. F-2 Table of Contents Accrued and Prepaid Research and Development Expenses Description of the Matter As discussed in Note 2 to the consolidated financial statements, the Company estimates its accrued and prepaid research and development expenses based on the estimated level of effort expended each period. As of December 31, 2024, the Company recorded prepaid expenses of $49.4 million which included prepayment for certain clinical trial costs and recorded $38.4 million for accrued clinical trial costs. Auditing management’s accounting for accrued and prepaid research and development expenses was challenging in the context of our audit due to the estimation required by management to determine the cost incurred for the services rendered on or prior to the balance sheet date for preclinical development activities, preclinical and clinical studies and drug substance and drug product formulation for preclinical and clinical trial material. The Company has contracts with multiple clinical research organizations (“CROs”) that conduct and manage studies on its behalf, as well as contract manufacturing organizations (“CMOs”) that perform manufacturing activities. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows during the period. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of relevant controls over the Company’s accrued and prepaid research and development expenses, including controls over the determination of costs incurred to date and the completeness and accuracy of the data used in determining prepaid and accrued research and development expenses estimate. To evaluate the completeness, measurement and valuation of the accrued and prepaid research and development expenses, our audit procedures included, among others, reading certain contracts with CROs and CMOs to evaluate the financial and other relevant contractual terms, testing the accuracy and completeness of the underlying data used by management to estimate the recorded balances, and testing the mathematical accuracy of the calculation of the accrued or prepaid balances. We also evaluated management’s estimates of costs incurred to date for a sample of clinical trials and manufacturing efforts by making direct inquiries of the Company’s research and development personnel who oversee the research and development program. Further, we requested direct confirmation of total contract value, costs incurred, amounts invoiced, invoices unpaid and expected service period as of December 31, 2024, from a sample of CROs and CMOs. To evaluate the completeness of the accrued research and development expenses we also examined invoices received from a sample of vendors and a sample of cash disbursements made to third-party service providers subsequent to December 31, 2024, to the extent such invoices were received, or payments were made prior to the date that the financial statements were issued. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2022. Boston, Massachusetts March 3, 2025 F-3 Table of Contents BIOHAVEN LTD. CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share amounts) December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 99,134 $ 248,402 Marketable securities 386,857 133,417 Prepaid expenses 49,376 35,242 Income tax receivable 2,597 13,252 Other current assets 508 12,133 Total current assets 538,472 442,446 Property and equipment, net 17,320 17,191 Intangible assets 18,400 18,400 Goodwill 1,390 1,390 Other non-current assets 39,525 33,785 Total assets $ 615,107 $ 513,212 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 18,029 $ 15,577 Accrued expenses and other current liabilities 51,487 39,846 Forward contract and derivative liability 84,710 — Total current liabilities 154,226 55,423 Non-current operating lease liability 32,782 27,569 Other non-current liabilities 4,663 2,245 Total liabilities 191,671 85,237 Commitments and contingencies (Note 11) Shareholders' Equity: Preferred shares, no par value; 10,000,000 shares authorized, no shares issued and outstanding as of December 31, 2024 and 2023 — — Common shares, no par value; 200,000,000 shares authorized as of December 31, 2024 and 2023; 101,221,989 and 81,115,723 shares issued and outstanding as of December 31, 2024 and 2023, respectively 1,656,702 887,528 Additional paid-in capital 112,369 39,804 Accumulated deficit ( 1,345,714 ) ( 499,292 ) Accumulated other comprehensive income (loss) 79 ( 65 ) Total shareholders' equity 423,436 427,975 Total liabilities and shareholders' equity $ 615,107 $ 513,212 The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents BIOHAVEN LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share and per share amounts) Year Ended December 31, 2024 2023 2022 Operating expenses: Research and development $ 795,871 $ 373,281 $ 437,072 General and administrative 89,240 62,770 130,860 Total operating expenses 885,111 436,051 567,932 Loss from operations ( 885,111 ) ( 436,051 ) ( 567,932 ) Other income (expense): Other income (expense), net 39,424 26,500 ( 1,909 ) Total other income (expense), net 39,424 26,500 ( 1,909 ) Loss before provision (benefit) for income taxes ( 845,687 ) ( 409,551 ) ( 569,841 ) Provision (benefit) for income taxes 735 ( 1,383 ) 438 Net loss $ ( 846,422 ) $ ( 408,168 ) $ ( 570,279 ) Net loss per share — basic and diluted $ ( 9.28 ) $ ( 5.73 ) $ ( 12.75 ) Weighted average common shares outstanding—basic and diluted 91,234,337 71,200,527 44,741,316 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents BIOHAVEN LTD. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Amounts in thousands) Year Ended December 31, 2024 2023 2022 Net loss $ ( 846,422 ) $ ( 408,168 ) $ ( 570,279 ) Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 78 ( 497 ) 429 Net unrealized gain (loss) related to available-for-sale debt securities 66 148 ( 145 ) Other comprehensive income (loss) 144 ( 349 ) 284 Comprehensive loss $ ( 846,278 ) $ ( 408,517 ) $ ( 569,995 ) The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents BIOHAVEN LTD. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Amounts in thousands, except share amounts) Common Shares Shares Amount Net Investment from Former Parent Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive (Loss) Income Total Shareholders' Equity Balances as of December 31, 2021 — $ — $ 34,691 $ — $ — $ — $ 34,691 Net loss — — ( 479,155 ) — ( 91,124 ) — ( 570,279 ) Net transfers from Former Parent, including separation related adjustments — — 776,630 — — — 776,630 Issuance of common shares in connection with the Separation and reclassification of Net investment from Former Parent 39,375,944 332,166 ( 332,166 ) — — — — Issuance of common shares, net of offering costs 28,750,000 282,804 — — — — 282,804 Issuance of common shares under 2022 Equity Incentive Plan 64,535 772 — ( 321 ) — — 451 Non-cash share-based compensation expense — — — 14,189 — — 14,189 Other comprehensive income — — — — — 284 284 Balances as of December 31, 2022 68,190,479 615,742 — 13,869 ( 91,124 ) 284 538,771 Net loss — — — — ( 408,168 ) — ( 408,168 ) Issuance of common shares, net of offering costs 11,761,363 242,425 — — — — 242,425 Issuance of common shares as payment for license agreement 721,136 21,814 — — — — 21,814 Issuance of common shares under 2022 Equity Incentive Plan and employee share purchase plan 442,745 7,547 — ( 2,852 ) — — 4,695 Non-cash share-based compensation expense — — — 28,787 — — 28,787 Other comprehensive loss — — — — — ( 349 ) ( 349 ) Balances as of December 31, 2023 81,115,723 887,528 — 39,804 ( 499,292 ) ( 65 ) 427,975 Net loss — — — — ( 846,422 ) — ( 846,422 ) Issuance of common shares, net of offering costs 16,752,439 664,015 — — — — 664,015 Issuance of common shares as payment for IPR&D asset 253,838 10,811 — — — — 10,811 Issuance of common shares as payment under license and other agreements 1,970,261 71,627 — — — — 71,627 Obligation to issue common shares as payment under license and other agreements — — — 8,554 — — 8,554 Issuance of common shares under 2022 Equity Incentive Plan and 2022 Employee Share Purchase Plan 1,129,728 22,721 — ( 11,292 ) — — 11,429 Issuance of warrant as payment under license agreement — — — 3,340 — — 3,340 Non-cash share-based compensation expense — — — 71,963 — — 71,963 Other comprehensive income — — — — — 144 144 Balances as of December 31, 2024 101,221,989 $ 1,656,702 $ — $ 112,369 $ ( 1,345,714 ) $ 79 $ 423,436 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents BIOHAVEN LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Year ended December 31, 2024 2023 2022 Cash flows from operating activities: Net loss $ ( 846,422 ) $ ( 408,168 ) $ ( 570,279 ) Adjustments to reconcile net loss to net cash used in operating activities: Non-cash share-based compensation 71,963 28,787 193,556 Acquisition of IPR&D asset 10,811 — 93,747 Impairment of Artizan preferred stock — — 10,000 Depreciation and amortization 7,855 6,912 1,386 Issuance of Former Parent common shares as payment for license and consulting agreements — — 1,779 Issuance of common shares as payment for license agreement 71,627 21,814 — Obligation to issue common shares as payment for license agreements and other arrangements 8,554 — — Fair value of forward contract and derivative liabilities under license agreement 102,529 — — Change in fair value of forward contract and derivative liabilities ( 17,819 ) — — Issuance of warrant under license agreement 3,340 — — Other non-cash items ( 11,702 ) ( 5,683 ) 726 Changes in operating assets and liabilities: Prepaid expenses, income tax receivable, and other current and non-current assets 8,043 27,176 ( 41,336 ) Accounts payable 710 4,874 5,928 Accrued expenses and other current and non-current liabilities 8,058 ( 7,437 ) 6,804 Net cash used in operating activities $ ( 582,453 ) $ ( 331,725 ) $ ( 297,689 ) Cash flows from investing activities: Proceeds from maturities of marketable securities 504,364 322,079 — Proceeds from sales of marketable securities — 4,920 — Purchases of marketable securities ( 745,680 ) ( 194,121 ) ( 259,716 ) Purchases of property and equipment ( 4,049 ) ( 3,048 ) ( 6,074 ) Payment for IPR&D asset acquisition — — ( 35,000 ) Cash acquired from acquisition of IPR&D asset 391 — — Purchase of Artizan preferred stock — — ( 4,000 ) Net cash (used in) provided by investing activities $ ( 244,974 ) $ 129,830 $ ( 304,790 ) Cash flows from financing activities: Net transfers from Former Parent — — 449,130 Change in restricted cash due to Former Parent — ( 35,212 ) 35,212 Proceeds from issuance of common shares 666,165 243,225 283,804 Payments of issuance costs ( 2,150 ) ( 800 ) ( 1,000 ) Proceeds from issuance of common shares under 2022 Equity Incentive Plan and 2022 Employee Share Purchase Plan 11,501 4,695 451 Other financing activities, net 2,258 — — Net cash provided by financing activities $ 677,774 $ 211,908 $ 767,597 Effect of exchange rates on cash, cash equivalents and restricted cash 75 ( 497 ) 429 Net (decrease) increase in cash, cash equivalents and restricted cash ( 149,578 ) 9,516 165,547 Cash, cash equivalents and restricted cash at beginning of period 252,120 242,604 77,057 Cash, cash equivalents and restricted cash at end of period $ 102,542 $ 252,120 $ 242,604 Supplemental disclosure of cash flow information: Cash paid for interest $ 125 $ — $ — Cash (received) paid for income taxes $ ( 10,444 ) $ ( 33,300 ) $ 38,165 The accompanying notes are an integral part of these consolidated financial statements. F-8 Table of Contents BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 1. Nature of the Business and Basis of Presentation Biohaven Ltd. (“we,” “us," "our," "Biohaven" or the “Company”) was incorporated in Tortola, British Virgin Islands in May 2022. Biohaven is a biopharmaceutical company focused on the discovery, development, and commercialization of life-changing treatments in key therapeutic areas, including immunology, neuroscience, and oncology. The Company is advancing its innovative portfolio of therapeutics, leveraging its proven drug development experience and multiple, proprietary drug development platforms. Biohaven's extensive clinical and preclinical programs include Kv7 ion channel modulation for epilepsy and mood disorders; extracellular protein degradation for immunological diseases; Transient Receptor Potential Melastatin 3 ("TRPM3") antagonism for migraine and neuropathic pain; Tyrosine Kinase 2/Janus Kinase 1 ("TYK2/JAK1") inhibition for neuroinflammatory disorders; glutamate modulation for obsessive compulsive disorder (“OCD”); and spinocerebellar ataxia ("SCA"); myostatin inhibition for neuromuscular and metabolic diseases, including spinal muscular atrophy ("SMA") and obesity; antibody recruiting bispecific molecules ("ARMs") and antibody drug conjugates ("ADCs") for cancer. The Company is subject to risks and uncertainties common to companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts may require additional capital, additional personnel and infrastructure, and further regulatory and other capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. Separation from Biohaven Pharmaceutical Holding Company Ltd. On October 3, 2022, Biohaven Pharmaceutical Holding Company Ltd. (the “Former Parent”) completed the distribution (the “Distribution”) to holders of its common shares of all of the outstanding common shares of Biohaven Ltd. and the spin-off of Biohaven Ltd. from the Former Parent (the “Spin-Off”) described in Biohaven’s Information Statement attached as Exhibit 99.1 to Biohaven’s Registration Statement on Form 10, as amended (Reg. No. 001-41477). Collectively, we refer to the Distribution and Spin-Off throughout this Quarterly Report on Form 10-Q as the "Separation." As a result of the Separation, Biohaven Ltd. became an independent, publicly traded company as of October 3, 2022, and commenced regular way trading under the symbol “BHVN”’ on the New York Stock Exchange (the "NYSE") on October 4, 2022. Where we describe historical business activities in this report, we do so as if the Former Parent’s activities related to such assets and liabilities had been performed by the Company. In connection with the Separation, the Company entered into various agreements relating to transition services, licenses and certain other matters with the Former Parent. For additional information regarding these agreements, see Note 13, "Related Party Transactions." Basis of Presentation The financial statements for all periods presented, including the historical results of the Company prior to October 3, 2022, are now referred to as "Consolidated Financial Statements," and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying consolidated financial statements include the accounts of Biohaven Ltd. and our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Periods Prior to the Separation On October 3, 2022, the Company became a standalone publicly traded company, and its financial statements are now presented on a consolidated basis. Prior to the Separation on October 3, 2022, the Company’s historical combined financial statements were prepared on a standalone basis and were derived from the Former Parent's consolidated financial statements and accounting records. For periods prior to the Separation, the consolidated financial statements present, on a historical basis, the combined assets, liabilities, expenses and cash flows directly attributable to the Business, which have been prepared from the Former Parent’s consolidated financial statements and accounting records, and are presented on a stand-alone F-9 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 1. Nature of the Business and Basis of Presentation (Continued) basis as if the operations had been conducted independently from the Former Parent. The consolidated statements of operations for periods prior to the Separation include all costs directly related to the Business, including costs for facilities, functions and services utilized by the Company. The consolidated statements of operations for periods prior to the Separation also include allocations for various expenses related to the Former Parent’s corporate functions, including research and development, human resources, information technology, facilities, tax, shared services, accounting, finance and legal. These expenses were allocated on the basis of direct usage or benefit when specifically identifiable, with the remainder allocated on a proportional cost allocation method primarily based on employee labor hours or direct expenses. Management believes the assumptions underlying the consolidated financial statements for periods prior to the Separation, including the expense methodology and resulting allocation, are reasonable for all periods presented. However, the allocations may not include all of the actual expenses that would have been incurred by the Company and may not reflect its consolidated results of operations, financial position and cash flows had it been a standalone company during the periods presented. It is not practicable to estimate actual costs that would have been incurred had the Company been a standalone company and operated as an unaffiliated entity during the periods presented. Actual costs that might have been incurred had the Company been a standalone 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. The income tax amounts in the consolidated financial statements for the periods prior to the Separation were calculated on a separate return method and is presented as if the Company’s operations were separate taxpayers in the respective jurisdiction. Therefore, tax expense, cash tax payments, and items of current and deferred taxes may not be reflective of the Company's actual tax balances prior to or subsequent to the Distribution. The consolidated balance sheets for periods prior to the Separation include assets and liabilities that have been determined to be specifically identifiable or otherwise attributable to the Company, including certain assets that were historically held at the corporate level in the Former Parent. All intracompany transactions within the Company have been eliminated. All intercompany transactions between the Company and the Former Parent are considered to be effectively settled in the consolidated financial statements at the time the transactions are recorded. The total net effect of these intercompany transactions considered to be settled is reflected in the consolidated statement of cash flows within financing activities as “Net transfers from Former Parent.” See Note 13, "Related Party Transactions," for additional information regarding related party transactions. For periods prior to the Separation, the Company's equity balance in these consolidated financial statements represents the excess of total assets over liabilities. Net investment from Former Parent is primarily impacted by contributions from the Former Parent, which are the result of net funding provided by or distributed to the Former Parent. As a result of the Separation, the Company’s Net investment from Former Parent balance was reclassified to common shares. The Net investment from Former Parent balance reclassified to common shares during the fourth quarter of 2022 included Separation-related adjustments of $ 27,811 . The adjustments related primarily to differences in the amount of assets and liabilities transferred to the Company upon the Separation and the amount of the transferred assets and liabilities reported in the Company’s combined balance sheet as of September 30, 2022. Going Concern In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. Through March 3, 2025, the Company has funded its operations primarily with funding from the Former Parent, proceeds from the sale of its common shares (refer to Note 6, "Shareholders' Equity"), and the cash contribution received from the Former Parent at the Separation (refer to Note 13, "Related Party Transactions.") The Company has incurred recurring losses since its inception and expects to continue to generate operating losses for the foreseeable future. As of the date of issuance of these consolidated financial statements, the Company expects its existing cash, cash equivalents and marketable securities will be sufficient to fund operating and financial commitments, and other cash requirements for at least one year after the issuance date of these financial statements. To execute its business plans, the Company will require funding to support its continuing operations and pursue its growth strategy. Until such time as the Company can generate significant revenue from product sales or royalties, if ever, it expects to finance its operations through the sale of public or private equity, debt financings or other capital sources, F-10 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 1. Nature of the Business and Basis of Presentation (Continued) including collaborations with other companies or other strategic transactions. The Company may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s shareholders. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of 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 consolidated financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the accrual for research and development expenses, valuation of forward contract and derivative liabilities, and determining the allocations of costs and expenses from the Former Parent. 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. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less at the date of purchase to be cash equivalents. The Company's cash equivalents are comprised of short-term money market funds and marketable securities that are highly liquid and readily convertible to known amounts of cash. Restricted Cash Restricted cash included in other current assets consists primarily of employee contributions to the Company's employee share purchase plan held for future purchases of the Company's outstanding shares. See Note 8, "Non-Cash Share-Based Compensation," for additional information on the Company's employee share purchase plan. Restricted cash included in other non-current assets in the consolidated balance sheets primarily represents collateral held by banks for a letter of credit ("LOC") issued in connection with the leased office space in Yardley, Pennsylvania and LOCs issued in connection with the leased office and lab spaces in Cambridge, Massachusetts and Pittsburgh, Pennsylvania. See Note 11, "Commitments and Contingencies," for additional information on the real estate leases. The following represents a reconciliation of cash and cash equivalents in the consolidated balance sheets to total cash, cash equivalents and restricted cash for the years ended December 31, 2024, 2023 and 2022, respectively, in the consolidated statements of cash flows: December 31, 2024 2023 2022 Cash and cash equivalents $ 99,134 $ 248,402 $ 204,877 Restricted cash held on behalf of Former Parent — — 35,212 Restricted cash (included in other current assets) 275 1,318 117 Restricted cash (included in other non-current assets) 3,133 2,400 2,398 Total cash, cash equivalents and restricted cash at the end of the period in the consolidated statement of cash flows $ 102,542 $ 252,120 $ 242,604 Marketable Securities We invest our excess cash balances in marketable securities of highly rated financial institutions, which consist of investment-grade debt instruments. We seek to diversify our investments and limit the amount of investment concentrations for individual institutions, maturities and investment types. We classify marketable debt securities as available-for-sale and, accordingly, record such securities at fair value on the consolidated balance sheets. We classify F-11 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 2. Summary of Significant Accounting Policies (Continued) these securities as current assets as these investments are intended to be available to the Company for use in funding current operations. Unrealized gains and losses on our marketable debt securities that are deemed temporary are included in accumulated other comprehensive income as a separate component of shareholders’ equity. If any adjustment to fair value reflects a significant decline in the value of the security, we evaluate the extent to which the decline is determined to be other-than-temporary and would mark the security to market through a charge to our consolidated statement of operations. Credit losses are identified when we do not expect to receive cash flows sufficient to recover the amortized cost basis of a security. In the event of a credit loss, only the amount associated with the credit loss is recognized in operating results, with the amount of loss relating to other factors recorded in accumulated other comprehensive income. Forward Contracts and Derivative Liabilities The Company evaluates certain of its financial and business development transactions to determine the accounting classification of equity linked instruments issued in those transactions. The Company first assesses whether a freestanding equity linked instrument meets liability classification in accordance with ASC 480-10 Distinguishing Liabilities from Equity and ASC 815-40 Derivatives and Hedging - Contracts in Entity's Own Equity . Under ASC 480-10 an instrument is considered liability classified if the instrument is mandatorily redeemable, obligate the issuer to settle an instrument or the underlying shares by paying cash or other assets, or must or may require settlement by issuing variable number of shares. If an instrument does not meet liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require net cash settlement are liabilities recorded at fair value. If the instrument does not require liability classification under ASC 815-40, in order to conclude equity classification, the Company assesses whether the instrument is indexed to its common stock and whether the instrument is classified as equity under ASC 815-40 or other applicable GAAP. Equity linked instruments that are accounted for in accordance with ASC 815-40 are reported as liabilities on the consolidated balance sheets at fair value. Any change in fair value, as determined at each measurement period, is recorded as a component of other income, net on the consolidated statements of operations. Changes in fair value are reported on the consolidated statements of cash flows as change in fair value of forward contract and derivative liabilities. The Company accounted for certain consideration agreed to in connection with the amendment, dated as of May 1, 2024 (the "Knopp Amendment"), to the Membership Interest Purchase Agreement, dated as of February 24, 2022 (the "Purchase Agreement") entered into with Knopp Biosciences, LLC ("Knopp") as derivative liabilities under ASC 815 (see Notes 4, "Fair Value of Financial Assets and Liabilities" and 10, "License, Acquisitions and Other Agreements"). Warrants The Company evaluates warrants issued as either equity instruments, liabilities or derivative liabilities in accordance with ASC Topic 480, Distinguishing Liabilities from Equity ("ASC 480") and/or ASC Topic 815, Derivatives and Hedging ("ASC 815"), depending on the specific terms of the warrant agreement. The Company assessed the warrants issued to Knopp in May 2024 (the "Knopp Warrants") and concluded that they met the criteria for equity classification under ASC 480 and ASC 815. Accordingly, the Knopp Warrants were recorded within additional paid-in capital on the consolidated balance sheet at the time of issuance and are not subject to remeasurement. See Note 6, "Shareholders' Equity," for further detail on the Knopp Warrants. Acquisitions Our 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 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 of IPR&D and contingent consideration is generally estimated by using a probability-weighted discounted cash flow approach. F-12 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 2. Summary of Significant Accounting Policies (Continued) Property and Equipment Property and equipment are recorded at cost and depreciated or amortized using the straight-line method over the estimated useful lives of the respective assets. As of December 31, 2024 and December 31, 2023, the Company's property and equipment consisted of building and land, office and lab equipment, computer hardware and software, furniture and fixtures, and leasehold improvements. The fixed assets have the following useful lives: Building 30 years Office equipment 3 - 5 years Computer hardware and software 3 - 5 years Lab equipment 3 years Furniture and fixtures 3 years Leasehold improvements Shorter of the useful life or remaining lease term Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in loss from operations. Expenditures for repairs and maintenance are charged to expense as incurred. Property and equipment are monitored regularly for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Intangible Assets 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 accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project, the asset is classified as a definite-lived intangible and 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 reviews amounts capitalized as acquired IPR&D for impairment annually, as of November 30, and whenever events or changes in circumstances indicate that the carrying value of the assets might not be recoverable. If impairment indicators are present, the Company performs 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. The Company did not record any impairment charges relating to its acquired IPR&D for the years ended December 31, 2024, 2023 or 2022. If the Company acquires an asset or group of assets that do not meet the definition of a business under applicable accounting standards, the acquired IPR&D is expensed on its acquisition date, unless it has an alternative future use. Future costs to develop these assets are recorded to research and development expense as they are incurred. In January 2021, in connection with the Company's acquisition of Kleo Pharmaceuticals, Inc. (“Kleo”), it recorded intangible assets consisting of IPR&D assets of $ 18,400 , which included an oncology therapeutic candidate entering Phase I clinical trials (BHV-1100) and a Multimodal Antibody Therapy Enhancer ("MATE") conjugation asset in the planning stage for clinical development, and goodwill of $ 1,390 . Impairment of Long-lived Assets The Company reviews its long-lived assets for indicators of impairment at least annually, as of November 30, and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If such indicators are present, the Company assesses the recoverability of affected assets by determining whether the carrying value of such assets is less than the sum of the undiscounted future cash flows of the assets. If such assets are found not to be recoverable, the Company measures the amount of such impairment by comparing the carrying value of the assets F-13 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 2. Summary of Significant Accounting Policies (Continued) to the fair value of the assets, with the fair value generally determined based on the present value of the expected future cash flows associated with the assets. The Company did not record any impairment charges relating to its long-lived assets for the years ended December 31, 2024, 2023 or 2022. Fair Value Measurements Certain assets and liabilities 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 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. The carrying values of other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities. The Company has accounted for certain consideration agreed to in connection with the Knopp Amendment as forward contract liabilities, which are recorded on the consolidated balance sheets at fair value. Any changes in fair value, as determined each measurement period, are recorded as a component of other income, net on the consolidated statements of operations. The fair value of the forward contract liabilities is determined based on significant inputs not observable in the market, and therefore represents a Level 3 measurement within the fair value hierarchy. The valuations are based on a Monte Carlo simulation of the Company's share price, which requires judgement and assumption on the volatility of Biohaven's share price, discounted to present value using a risk-free rate plus Biohaven specific credit risk since payable in a variable number of shares. (see Notes 4, "Fair Value of Financial Assets and Liabilities" and 10, "License, Acquisitions and Other Agreements"). Leases The Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments. If the interest rate implicit in the Company’s leases is not readily determinable, the Company utilizes an estimate of its incremental borrowing rate based on market sources including interest rates for companies with similar credit quality for agreements of similar duration, determined by class of underlying asset, to discount the lease payments. The right-of-use assets also include lease payments made before commencement and exclude lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for these short-term leases are expensed as incurred over the term of the lease. Certain real estate leases require additional payments including reimbursement for real estate taxes, common area maintenance and insurance, which are expensed as incurred as variable lease costs. Other real estate leases contain one fixed lease payment that includes real estate taxes, common area maintenance and insurance. These fixed payments are considered part of the lease payment and included in the right-of-use assets and lease liabilities. For its real estate leases, which are accounted for as operating leases, the Company has elected the practical expedient to include both the lease and non-lease components as a single component. In addition, payments made by the F-14 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 2. Summary of Significant Accounting Policies (Continued) Company for improvements to the underlying asset, if the payment relates to an asset of the lessor, are recorded as prepaid rent within other non-current assets in the consolidated balance sheets prior to lease commencement and on commencement, reclassified to the right-of-use asset. As of December 31, 2024, the Company had restricted cash of $ 3,133 included in other non-current assets in the consolidated financial statements, which represents collateral held by banks for letters of credit issued in connection with the leased office space in Yardley, Pennsylvania and leased office and lab spaces in Cambridge, Massachusetts and Pittsburgh, Pennsylvania. Restricted cash is generally invested in time deposits and short-term money market funds. See Note 11, "Commitments and Contingencies," for additional information on real estate leases. Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including salaries, non-cash share-based compensation and benefits, third-party license fees, rent and operating expenses for leased lab facilities, and external costs of vendors engaged to conduct clinical development activities and clinical trials as well as to manufacture clinical trial materials. Prepayments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered. The Company has entered into various research and development-related contracts. These agreements are cancellable, and related expenses are recorded as research and development expenses are incurred. The Company records accruals for estimated ongoing research costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Certain judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company's estimates. The Company's historical accrual estimates have not been materially different from the actual costs. Foreign Currency 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 and weighted average exchange rates for operating results. The resulting translation gains and losses are included in accumulated other comprehensive (loss) income, net of tax, in shareholders’ equity. For U.S. dollar functional currency subsidiaries, foreign currency assets and liabilities are remeasured into U.S. dollars at end-of-period exchange rates, except for nonmonetary balance sheet accounts which are remeasured at historical exchange rates. Revenues and expenses are remeasured at average exchange rates in effect during each period, except for those expenses related to the nonmonetary balance sheet amounts which are remeasured at historical exchange rates. Gains or losses from foreign currency remeasurement are included in other income (expense), net in the consolidated statement of operations. The Company's aggregate foreign currency transaction gains and losses and effects of foreign currency remeasurements were immaterial for the years ended December 31, 2024, 2023 and 2022. Non-Cash Share-Based Compensation The Company measures share options and restricted share unit awards granted to employees, non-employees, and directors based on the fair value on the date of the grant and recognizes compensation expense of those awards, over the requisite service period, which is generally the vesting period of the respective award. Forfeitures are accounted for as they occur. Generally, the Company issues share options and restricted share units with only service-based vesting conditions and records the expense for these awards using the straight-line method. The Company also issues share options with performance-based vesting conditions and records expense for these awards when the Company concludes that it is probable that the performance condition will be achieved. The Company classifies non-cash share-based compensation expense in its consolidated statement of operations in the same manner in which the award recipient's payroll costs are classified or in which the award recipient's service payments are classified. The fair value of each share option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company lacks a sufficient history of company-specific historical and implied volatility information for its F-15 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 2. Summary of Significant Accounting Policies (Continued) shares. Therefore, it estimates its expected share price volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. The expected term of all of the Company's share options has been determined utilizing the "simplified" method. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common shares and does not expect to pay any cash dividends in the foreseeable future. Management evaluates its award grants and modifications and will adjust the fair value if any are determined to be spring-loaded. Share-Based Compensation for Periods Prior to the Separation Prior to the Separation from the Former Parent on October 3, 2022, certain of the Company’s employees have historically participated in the Former Parent’s non-cash share-based compensation plans. Non-cash share-based compensation expense for periods prior to the Separation has been allocated to the Company based on a combination of specific identification and a proportionate cost allocation method. Income Taxes The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company's tax returns. Deferred tax assets and liabilities are determined on the basis of the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The provision for income taxes includes the effects of applicable tax reserves, or unrecognized tax benefits, as well as the related net interest and penalties. Net Loss per Share Basic net loss per common share is calculated by dividing net loss by the weighted-average shares outstanding during the period. For purposes of the diluted net loss per share calculation, common share options are considered to be common share equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for all periods presented. Net Loss per Share for Periods Prior to the Separation Net loss per share for periods prior to the Separation from the Former Parent was calculated based on the 39,375,944 shares of the Company's common shares distributed to the Former Parent's shareholders at the time of the Distribution, including common shares issued in connection with Former Parent share options that were exercised on October 3, 2022 and common shares issued in connection with Former Parent restricted share units that vested on October 3, 2022. The same number of shares is being utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Spin-Off. Concentrations of Credit Risk Financial instruments that potentially expose the Company to concentrations of credit risk consist of cash, cash equivalents, and short-term debt securities. The Company maintains a portion of its cash deposits in government insured institutions in excess of government insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts. The Company's cash management policy permits investments in U.S. federal government and federal agency securities, corporate bonds or commercial paper, supranational and sovereign obligations, certain qualifying money market mutual funds, certain repurchase agreements, and places restrictions on credit ratings, maturities, and concentration by type and issuer. The Company is exposed to F-16 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 2. Summary of Significant Accounting Policies (Continued) credit risk in the event of a default by the financial institutions holding its cash in excess of government insured limits and in the event of default by corporations and governments in which it holds investments in cash equivalents and short-term debt securities, to the extent recorded on the consolidated balance sheets. Segment Information The Company manages its operations as a single segment, focused on the discovery, development, and commercialization of life-changing treatments in key therapeutic areas, including immunology, neuroscience, and oncology for the purposes of assessing performance and making operating decisions. Consistent with our operational structure, the Company’s Chief Operating Decision Maker ("CODM") manages and allocates resources at a consolidated level. See Note 14, "Segment Information" for further detail. Recently Adopted Accounting Pronouncements In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures, which expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in ASU No. 2023-07 apply to public entities, including those with a single reportable segment, and are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-07 as of January 1, 2024, the primary impact of which was the disclosure of the significant segment expenses reviewed by the Company’s CODM. Refer to Note 14, "Segment Information" for disclosure of the information required under ASU 2023-07. Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The ASU also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the impact ASU No. 2023-09 will have on its consolidated financial statements. In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires disclosure, in the notes to the financial statements, of specified information about certain costs and expenses. This ASU is effective for public entities for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact ASU 2024-03 will have on its consolidated financial statements. F-17 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 3. Marketable Securities The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of debt securities available-for-sale by type of security at December 31, 2024 and December 31, 2023 is as follows: Amortized Cost Allowance for Credit Losses Net Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2024 Debt securities U.S. treasury bills $ 312,262 $ — $ 312,262 $ 82 $ ( 47 ) $ 312,297 U.S. treasury bonds 74,526 — 74,526 34 — 74,560 Total $ 386,788 $ — $ 386,788 $ 116 $ ( 47 ) $ 386,857 December 31, 2023 Debt securities U.S. corporate bonds $ 46,228 $ — $ 46,228 $ 7 $ ( 24 ) $ 46,211 Foreign corporate bonds 7,180 — 7,180 — ( 7 ) 7,173 U.S. treasury bills 113,908 — 113,908 27 — 113,935 Total $ 167,316 $ — $ 167,316 $ 34 $ ( 31 ) $ 167,319 The fair values of debt securities available-for-sale by classification in the consolidated balance sheets were as follows: December 31, 2024 December 31, 2023 Cash and cash equivalents $ — $ 33,902 Marketable securities 386,857 133,417 Total $ 386,857 $ 167,319 The net amortized cost and fair value of debt securities available-for-sale at December 31, 2024 and December 31, 2023 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. December 31, 2024 December 31, 2023 Net Amortized Cost Fair Value Net Amortized Cost Fair Value Due to mature: Less than one year $ 386,788 $ 386,857 $ 167,316 $ 167,319 F-18 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 3. Marketable Securities (Continued) Summarized below are the debt securities available-for-sale the Company held at December 31, 2024 and December 31, 2023 that were in an unrealized loss position, aggregated by the length of time the investments have been in that position: Less than 12 months Number of Securities Fair Value Unrealized Losses December 31, 2024 Debt securities U.S. treasury bills 4 $ 58,988 $ ( 47 ) December 31, 2023 Debt securities U.S. corporate bonds 6 $ 29,537 $ ( 24 ) Foreign corporate bonds 1 7,173 ( 7 ) Total 7 $ 36,710 $ ( 31 ) The Company did no t have any investments in a continuous unrealized loss position for more than twelve months as of December 31, 2024 or December 31, 2023. The Company reviewed the securities in the table above and concluded that they are performing assets generating investment income to support the needs of the Company’s business. In performing this review, the Company considered factors such as the credit quality of the investment security based on research performed by external rating agencies and the prospects of realizing the carrying value of the security based on the investment’s current prospects for recovery. As of December 31, 2024, 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 prior to the anticipated recovery of their amortized cost basis. Net Investment Income Gross investment income includes interest income from debt securities available-for-sale, money-market funds, cash, and restricted cash. Net investment income included in other income (expense), net in the consolidated statements of operations for the years ended December 31, 2024, December 31, 2023, and December 31, 2022 were as follows: 2024 2023 2022 Debt securities (including realized losses) $ 14,477 $ 10,490 $ 1,454 Other investments 7,034 7,432 1,781 Gross investment income (including realized losses) 21,511 17,922 3,235 Investment expenses ( 177 ) ( 236 ) ( 27 ) Net investment income $ 21,334 $ 17,686 $ 3,208 We utilize the specific identification method in computing realized gains and losses on sales of debt securities. The proceeds from the sale of debt securities available-for-sale and the related gross realized losses for the year ended December 31, 2024, 2023 and 2022 were as follows: 2024 2023 2022 Proceeds from sales $ — $ 4,920 $ — Gross realized losses $ — $ 39 $ — 4. Fair Value of Financial Assets and Liabilities The preparation of the Company’s 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 F-19 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 4. Fair Value of Financial Assets and Liabilities (Continued) 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 Consolidated Balance Sheets Certain of the Company’s financial instruments are measured at fair value on the consolidated balance sheets on a recurring basis. The fair values of these instruments are based on valuations that include inputs that can be classified within one of three levels of a hierarchy established by GAAP. See Fair Value Measurements in Note 2, "Summary of Significant Accounting Policies," for a brief description of the type of valuation information (“valuation inputs”) that qualifies a financial asset or liability for each level. Financial assets measured at fair value on a recurring basis on the consolidated balance sheets at December 31, 2024 and December 31, 2023 and financial liabilities measured at fair value on a recurring basis on the consolidated balance sheet at December 31, 2024 were as follows: Fair Value Measurement Using: Balance Sheet Classification Type of Instrument Level 1 Level 2 Level 3 Total December 31, 2024 Assets: Cash equivalents Money market funds $ 38,967 $ — $ — $ 38,967 Marketable securities U.S. treasury bills 29,707 282,590 — 312,297 Marketable securities U.S. treasury bonds — 74,560 — 74,560 Other non-current assets Money market funds 3,133 — — 3,133 Total assets $ 71,807 $ 357,150 $ — $ 428,957 Liabilities: Forward contract liability, current $ — $ — $ 71,500 $ 71,500 Derivative liability, current — — 13,210 13,210 Total liabilities $ — $ — $ 84,710 $ 84,710 December 31, 2023 Assets: Cash equivalents Money market funds $ 59,199 $ — $ — $ 59,199 Cash equivalents U.S. treasury bills — 27,901 — 27,901 Cash equivalents U.S. corporate bonds — 6,001 — 6,001 Marketable securities U.S. treasury bills 9,874 76,160 — 86,034 Marketable securities U.S. corporate bonds — 40,210 — 40,210 Marketable securities Foreign corporate bonds — 7,173 — 7,173 Other non-current assets Money market funds 1,900 — — 1,900 Total assets $ 70,973 $ 157,445 $ — $ 228,418 The Company had no financial liabilities measured at fair value on a recurring basis as of December 31, 2023. There were no securities transferred between Level 1, 2, and 3 during the years ended December 31, 2024 or December 31, 2023. F-20 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 4. Fair Value of Financial Assets and Liabilities (Continued) The following is a description, including valuation methodology, of the financial assets and liabilities measured at fair value on a recurring basis: Cash Equivalents Cash equivalents at December 31, 2024 consisted of cash invested in short-term money market funds that were readily convertible to known amounts of cash and redeemable daily at the election of the Company. The carrying value of cash equivalents approximates fair value due to the near term maturity of the fund's underlying security holdings resulting in an insignificant change in value because of changes in interest rates. When quoted prices are available in an active market, cash equivalents are classified in Level 1 of the fair value hierarchy. Marketable Securities and Other Non-Current Assets Quoted prices for identical assets in active markets are considered Level 1 and consist of on-the-run U.S. Treasury bills. The fair values of the Company’s Level 2 debt securities are obtained from quoted market prices of debt securities with similar characteristics, quoted prices from identical assets in inactive markets, or discounted cash flows to estimate fair value. Forward Contract and Derivative Liability In connection with the Knopp Amendment, the Company agreed to issue to Knopp additional common shares of the Company with an approximate value of $ 75,000 within 60 days of the first anniversary of execution of the Knopp Amendment (the “2025 Additional Consideration”). In addition, Knopp has the option to request a one-time cash true-up payment from the Company in December 2025, as defined in the agreement (the "2025 Knopp True-up"). See Note 10, "License, Acquisitions and Other Agreements," for further details. The following table provides a roll forward of the fair value of the Company's forward contract and derivative liability related to the 2025 Additional Consideration and 2025 Knopp True-up, respectively, for which fair value is determined by Level 3 inputs from inception of the Knopp Amendment on May 1, 2024 to December 31, 2024: Carrying Value Fair value at May 1, 2024 (inception) $ 77,750 Change in fair value of forward contract and derivative liability in other income, net 6,960 Fair value at December 31, 2024 $ 84,710 The fair value of the forward contract and derivative liability recognized in connection with the Knopp Amendment was determined based on significant inputs not observable in the market, and therefore represents a Level 3 measurement within the fair value hierarchy. The valuation is based on a Monte Carlo simulation of Biohaven's share price, which requires judgement and assumptions on the volatility of Biohaven's share price, discounted to present value using a risk-free rate plus Biohaven specific credit risk since the 2025 Additional Consideration is payable in a variable number of shares or potentially cash for the 2025 Knopp True-up. A summary of the unobservable inputs (Level 3 inputs) used in measuring the Company’s forward contract and derivative liability related to the 2025 Additional Consideration and 2025 Knopp True-up, respectively, as of December 31, 2024 and May 1, 2024 are as follows, presented on a weighted-average basis based on relative fair value: As of December 31, 2024 As of May 1, 2024 Time to payment and potential payment (years) 0.50 1.08 Volatility (annual) 67.5 % 80.0 % Discount rate 12.0 % 14.8 % Our expectations of the volatility of Biohaven's share price at the reporting date could be materially different than our actual future volatility, and if so, would mean the estimated fair value could be significantly higher or lower than the fair value determined. The Company expects the fair value of the forward contract to be approximately $ 75,000 on the first anniversary of the Knopp Amendment. An increase in the derivative liability related to the 2025 Knopp True-up between the reporting date and settlement date of the derivative would have a material adverse effect on the Company's financial performance. F-21 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 5. Balance Sheet Components Property and Equipment, Net Property and equipment, net consisted of the following: As of December 31, 2024 As of December 31, 2023 Building and land $ 14,078 $ 11,728 Leasehold improvements 824 802 Computer hardware and software 875 875 Office and lab equipment 11,620 9,961 Furniture and fixtures 1,811 1,550 $ 29,208 $ 24,916 Accumulated depreciation ( 12,206 ) ( 8,283 ) 17,002 16,633 Equipment not yet in service 318 558 Property and equipment, net $ 17,320 $ 17,191 Depreciation expense was $ 3,923 , $ 3,369 and $ 1,361 for the years ended December 31, 2024, 2023 and 2022, respectively. Equipment not yet in service primarily consisted of lab equipment that had not been placed into service as of December 31, 2024 or 2023. Other Non-current Assets Other non-current assets consisted of the following: As of December 31, 2024 As of December 31, 2023 Operating lease right-of-use assets $ 36,391 $ 31,385 Other 3,134 2,400 Other non-current assets $ 39,525 $ 33,785 Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: As of December 31, 2024 As of December 31, 2023 Accrued clinical trial costs $ 38,432 $ 29,501 Operating lease liability - current portion 3,802 3,308 Other accrued expenses and other current liabilities 9,253 7,037 Accrued expenses and other current liabilities $ 51,487 $ 39,846 6. Shareholders' Equity FGFR3 Agreement In December 2024, the Company, GeneQuantum Healthcare (Suzhou) Co. Ltd. ("GeneQuantum") and Aimed Bio, Inc. ("Aimed Bio") entered into a development and license agreement (the "FGFR3 Agreement") pursuant to which Biohaven obtained the exclusive rights to develop and commercialize GeneQuantum's and Aimed Bio's joint research fibroblast growth factor receptor 3 ("FGFR3") ADC program. As consideration for the agreement, the Company was obligated to pay F-22 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 6. Shareholders' Equity (Continued) an upfront payment of 222,119 common shares valued at approximately $ 8,554 as of the effective date, which were issued in January 2025. Knopp Amendment In May 2024, the Company entered into the Knopp Amendment under which the parties thereto agreed to revise the success-based payment and royalty payment obligations under the Membership Purchase Agreement. As consideration, the Company issued 1,872,874 Biohaven Shares to Knopp, valued at approximately $ 65,981 in May 2024. As further consideration for the revisions to the success-based payment and royalty payment obligations in the Knopp Amendment, the Company issued to Knopp a warrant to purchase 294,195 of the Company's common shares with a purchase price of $ 67.98 , subject to certain specified development milestones and the Company achieving a specified market capitalization. The warrant was recorded at its initial fair value of $ 3,340 within additional paid-in capital on the consolidated balance sheet during the second quarter of 2024 and is not subject to remeasurement. Refer to Note 10, "License, Acquisitions and Other Agreements" for further detail on the Knopp Amendment. 2024 Public Offerings On April 22, 2024, the Company closed an underwritten public offering of 6,451,220 of its common shares, which included the exercise in full of the underwriters' option to purchase additional shares, at a price to the public of $ 41.00 per share, pursuant to a registration statement on Form S-3 filed with the SEC. The net proceeds raised in the offering, after deducting underwriting discounts and expenses of the offering payable by Biohaven, were approximately $ 247,830 . The Company intends to use the net proceeds received from the offering for general corporate purposes. On October 2, 2024, the Company closed an underwritten public offering of 6,052,631 of its common shares, which included the exercise in full of the underwriters' option to purchase additional shares, at a price to the public of $ 47.50 per share, pursuant to a registration statement on Form S-3 filed with the SEC. The net proceeds raised in the offering, after deducting underwriting discounts and expenses of the offering payable by Biohaven, were approximately $ 269,935 . The Company intends to use the net proceeds received from the offering for general corporate purposes. Pyramid Acquisition In January 2024, the Company acquired Pyramid pursuant to the Pyramid Agreement. In consideration for the Pyramid acquisition, Biohaven made an upfront payment of 255,794 Company common shares, valued at approximately $ 10,894 . As of December 31, 2024, 253,838 of these common shares have been issued by the Company. During the first quarter of 2024, the Company recorded $ 5,689 of research and development ("R&D") expense in the consolidated statement of operations for a developmental milestone which became due under the Pyramid Agreement, to be paid in 98,129 Company common shares. As of December 31, 2024, 97,387 of these common shares have been issued by the Company. Refer to Note 10, "License, Acquisitions and Other Agreements" for further discussion of the Pyramid acquisition. Equity Distribution Agreement In October 2023, the Company entered into an equity distribution agreement pursuant to which the Company may offer and sell common shares having an aggregate offering price of up to $ 150,000 from time to time through or to the sales agent, acting as its agent or principal (the "Equity Distribution Agreement"). Sales of the Company's common shares, if any, will be made in sales deemed to be “at-the-market offerings”. The sales agent is not required to sell any specific amount of securities but will act as the Company's sales agent using commercially reasonable efforts consistent with its normal trading and sales practices, on mutually agreed terms between the sales agent and the Company. The Company currently plans to use the net proceeds from any at-the-market offerings of its common shares for general corporate purposes. In August 2024, the Company entered into an amendment to the Equity Distribution Agreement pursuant to which the Company may offer and sell common shares having an aggregate offering price of up to $ 450,000 from time to time through or to the sales agent, acting as its agent or principal. As of December 31, 2024, the Company sold and issued 4,248,588 common shares under the Equity Distribution Agreement, as amended, for total net proceeds of approximately $ 146,250 . As of December 31, 2024, additional common shares having an aggregate offering price of up to $ 300,000 remain available to be issued. F-23 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 6. Shareholders' Equity (Continued) Highlightll Agreement In March 2023, the Company and Hangzhou Highlightll Pharmaceutical Co. Ltd. ("Highlightll") entered into an exclusive, worldwide (excluding People's Republic of China and its territories and possessions) license agreement (the "Highlightll Agreement") pursuant to which Biohaven obtained the right to research, develop, manufacture and commercialize Highlightll's brain penetrant dual TYK2/JAK1 inhibitor program. In connection with the Highlightll Agreement, in December 2023, the Company issued 721,136 common shares valued at $ 21,814 . See Note 10, "License, Acquisitions and Other Agreements," for further detail on the Highlightll Agreement. 2023 Public Offerings In October 2023, the Compan y completed an underwritten public offering of 11,761,363 of its common shares, including the exercise in full of the underwriters' option to purchase additional common shares, at a price to the public of $ 22.00 per share, pursuant to a registration statement on Form S-3 filed with the SEC. The net proceeds raised in the offering, after deducting underwriting discounts and expenses of the offering payable by the Company, were approximately $ 242,425 . 2022 Public Offerings In October 2022, the Company commenced a public offering of 25,000,000 of its common shares at a price of $ 10.50 per share, pursuant to a registration statement on Form S-1 filed with the SEC, which was declared effective by the SEC on October 20, 2022. The Company also granted the underwriters a 30-day option to purchase up to an additional 3,750,000 common shares. On October 25, 2022, the Company closed the offering, including a full exercise of the underwriters' option to purchase additional shares. The net proceeds raised in the offering, after deducting underwriting discounts and expenses of the offering payable by the Company, were approximately $ 282,804 . Separation from the Former Parent On October 3, 2022, the Former Parent completed the Distribution to holders of its common shares and the spin-off of Biohaven. Each holder of Former Parent common shares received one common share of Biohaven for every two Former Parent common shares held of record as of the close of business, New York City time, on September 26, 2022. In the Distribution, an aggregate of 35,840,459 common shares of the Company were issued. The aggregate number of common shares issued in connection with the Distribution did not include 2,611,392 common shares issued in connection with Former Parent share options that were exercised on October 3, 2022 and 924,093 common shares issued in connection with Former Parent restricted share units that vested on October 3, 2022. See Note 8, "Non-Cash Share-Based Compensation," for discussion of the Legacy Equity Award Settlement Plan. F-24 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 7. Accumulated Other Comprehensive Income (Loss) Shareholders’ equity included the following activity in accumulated other comprehensive income (loss) for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 2022 Net unrealized investment gains (losses): Beginning of period balance $ 3 $ ( 145 ) $ — Other comprehensive income (loss) 1) 66 109 ( 145 ) Amounts reclassified from accumulated other comprehensive income (loss) (2) — 39 — Other comprehensive income (loss) 66 148 ( 145 ) End of period balance 69 3 ( 145 ) Foreign currency translation adjustments: Beginning of period balance ( 68 ) 429 — Other comprehensive income (loss) (1) 78 ( 497 ) 429 End of period balance 10 ( 68 ) 429 Total beginning of period accumulated other comprehensive (loss) income ( 65 ) 284 — Total other comprehensive income (loss) 144 ( 349 ) 284 Total end of period accumulated other comprehensive income (loss) $ 79 $ ( 65 ) $ 284 (1) There was no tax on other comprehensive income (loss) and immaterial tax on amounts reclassified from accumulated other comprehensive income (loss) during the period. (2) Amounts reclassified from accumulated other comprehensive (loss) income for specifically identified debt securities are included in other income (expense), net in the consolidated statements of operations. No amounts were reclassified from accumulated other comprehensive income (loss) during the years ended December 31, 2024 or 2022. 8. Non-Cash Share-Based Compensation 2022 Equity Incentive Plan In September 2022, the Company's shareholders approved the 2022 Equity Incentive Plan (the "2022 Plan"), which became effective on October 3, 2022. The 2022 Plan provides for the grant of incentive share options, nonstatutory share options, share appreciation rights, restricted share awards, restricted share unit awards ("RSUs"), performance-based share awards and other share-based awards. Upon the effectiveness of the 2022 Plan, there were 9,190,000 common shares reserved for issuance under the 2022 Plan. As of December 31, 2024, the 2022 Plan allows for a maximum of 15,162,247 shares of the Company's common shares to be reserved and available for grants. Also as of December 31, 2024, there were 726,177 shares of the Company's common shares available for future grants under the 2022 Plan. The number of shares reserved for issuance under the 2022 Plan automatically increases on January 1 of each calendar year by 4 % of total common shares outstanding as of December 31 of the prior year, beginning October 3, 2022 through January 1, 2032. In January 2025, the number of common shares reserved for future issuance under the 2022 Plan automatically increased by 4,048,879 common shares. Legacy Equity Award Settlement Plan In September 2022, the Company's shareholders approved the Legacy Equity Award Settlement Plan (the "Legacy Plan"), which became effective on September 29, 2022. The Legacy Plan is intended solely to provide for the grant and settlement of nonstatutory share options and RSUs, issued in respect of share options and RSUs originally granted pursuant to the Former Parent's 2017 Equity Incentive Plan and 2014 Equity Incentive Plan. F-25 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 8. Non-Cash Share-Based Compensation (Continued) On October 3, 2022, the Former Parent completed the Distribution and the Separation. Each Former Parent share option and RSU outstanding prior to the Distribution was converted into .5 stock options and RSUs in the Company. In total, 4,057,121 share options and 924,093 RSUs were granted and settled into 2,611,392 and 924,093 common shares, respectively, under the Legacy Plan on October 3, 2022. Non-Cash Share-Based Compensation Expense For periods prior to the Separation from the Former Parent, non-cash share-based compensation has been allocated to the Company by using a combination of specific identification and a proportionate cost allocation method based on employee hours or directly identified operating expenses, depending on the employee’s function. The amounts presented are not necessarily indicative of future awards and do not necessarily reflect the costs that the Company would have incurred as an independent company for the periods presented. Upon the effectiveness of the Company's Spin-off from the Former Parent, each Former Parent share option and RSU outstanding vested immediately (the "Acceleration") and converted into .5 share options and RSUs in the Legacy Plan in the Company. The non-cash share-based compensation expense related to the Acceleration was then allocated to the Company using the same methodology described above and recognized immediately, resulting in $ 101,440 of non-cash share-based compensation expense recognized related to to the Acceleration in the fourth quarter of 2022. The share options and RSUs granted under the Legacy Plan also immediately vested and settled as a result of the Spin-off, and the Company determined that no incremental compensation should be recognized related to these awards. Non-cash share-based compensation under the Former Parent’s non-cash share-based compensation plans was measured at the grant date based on the fair value of the award and was recognized as expense over the requisite service period of the award (generally three to four years ) using the straight-line method. The Company measures non-cash share-based compensation 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. Non-cash share-based compensation expense, consisting of expense for stock options, RSUs, and the 2022 Employee Share Purchase Plan (the "ESPP"), was classified in the consolidated statements of operations as follows: Year Ended December 31, 2024 2023 2022 Research and development expenses Allocated from the Former Parent excluding the Acceleration $ — $ — $ 46,976 Allocated from the Former Parent related to the Acceleration — — 61,749 2022 Equity Incentive Plan 42,594 15,985 7,654 Total research and development expenses 42,594 15,985 116,379 General and administrative expenses Allocated from the Former Parent excluding the Acceleration — — 30,951 Allocated from the Former Parent related to the Acceleration — — 39,691 2022 Equity Incentive Plan 29,369 12,802 6,535 Total general and administrative expenses 29,369 12,802 77,177 Total non-cash share-based compensation expense $ 71,963 $ 28,787 $ 193,556 As of December 31, 2024, total unrecognized compensation cost related to the unvested share-based awards was $ 73,785 , which is expected to be recognized over a weighted average period of 1.50 years. Share Options All share option grants are awarded at fair value on the date of grant. The fair value of share options is estimated using the Black-Scholes option pricing model. Share options generally expire 10 years after the grant date. The aggregate intrinsic value of share options is calculated as the difference between the exercise price of the share options and the fair value of the Company's common shares for those share options that had exercise prices lower than the fair value of the Company's common shares at December 31, 2024. The total intrinsic value of share options exercised F-26 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 8. Non-Cash Share-Based Compensation (Continued) for the years ended December 31, 2024, 2023, and 2022 was $ 33,801 , $ 7,756 , and $ 20,137 , respectively. The tax benefit from share options exercised for the years ended December 31, 2024, 2023, and 2022 was not material. The assumptions that the Company used to determine the grant-date fair value of share options granted under the 2022 Plan were as follows, presented on a weighted average basis: Year Ended December 31, 2024 2023 2022 Risk-free interest rate 3.98 % 4.32 % 3.86 % Expected term (in years) 5.74 5.93 5.75 Expected volatility 86.31 % 84.60 % 82.05 % Expected dividend yield — % — % — % Exercise price $ 42.06 $ 24.57 $ 7.00 The following table is a summary of the Company's share option activity for the year ended December 31, 2024: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (in years) Outstanding as of December 31, 2023 11,379,429 $ 11.48 Granted 2,506,161 $ 42.06 Exercised ( 918,165 ) $ 9.36 Forfeited ( 186,341 ) $ 22.98 Outstanding as of December 31, 2024 12,781,084 $ 17.46 8.19 $ 265,659 Options exercisable as of December 31, 2024 7,612,676 $ 12.96 8.02 $ 188,466 Vested and expected to vest as of December 31, 2024 12,781,084 $ 17.46 8.19 $ 265,659 The weighted average grant date fair value per share of share options granted under the Company’s share option plans during the years ended December 31, 2024, 2023, and 2022 was $ 30.76 , $ 18.01 , and $ 4.97 , respectively. The Company expects approximately 5,168,408 of the unvested share options to vest over the requisite service period. Restricted Share Units As discussed above, in connection with the Distribution, on October 3, 2022, 924,093 RSUs were granted and settled into 924,093 common shares under the Legacy Equity Award Settlement Plan. 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. The total fair value of RSUs vested during the year ended December 31, 2024 was $ 3,991 . No RSUs were granted, forfeited, or vested in the year ended December 31, 2023. No fair value was assigned to the RSUs vested during the year ended December 31, 2022, as all RSUs that vested were related to the RSUs granted and settled under the Legacy Equity Award Settlement Plan. F-27 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 8. Non-Cash Share-Based Compensation (Continued) The following table is a summary of the RSU activity for the year ended December 31, 2024: Number of Shares Weighted Average Grant Date Fair Value Unvested as of December 31, 2023 — $ — Granted 381,011 $ 41.88 Forfeited ( 8,481 ) $ 41.93 Vested ( 95,309 ) $ 41.88 Unvested as of December 31, 2024 277,221 $ 41.87 Employee Share Purchase Plan In September 2022, the Company's board of directors approved the rules and procedures of the 2022 Employee Share Purchase Plan approved by shareholders of the Company on September 28, 2022. The ESPP allows each eligible employee who is participating in the plan to purchase shares by authorizing payroll deductions of up to 15 % of eligible earnings. Unless the participating employee has previously withdrawn from the offering, accumulated payroll deductions will be used to purchase shares on the last business day of the offering period at a price equal to 85% of the fair market value of the shares on the first business day or the last business day of the offering period, whichever is lower. Under applicable tax rules, an employee may purchase no more than $25 worth of ordinary shares, valued at the start of the offering period, under the ESPP in any calendar year. There is no minimum holding period associated with shares purchased pursuant to this plan. An employee’s purchase rights terminate immediately upon termination of employment. The number of shares reserved for issuance under the ESPP automatically increases on January 1 of each calendar year by 1 % of total common shares outstanding as of December 31 of the prior year, beginning October 3, 2022 through January 1, 2032. As of December 31, 2024, the ESPP allows for a maximum of 1,886,830 shares of the Company's common shares to be reserved and available for issuance under the ESPP. As of December 31, 2024, 1,627,399 shares remained available for future issuance under the ESPP. In January 2025, 1,012,219 additional shares were authorized to be issued under the ESPP. The Company accounts for employee share purchases made under its ESPP using an estimate of the grant date fair value, which is determined in accordance with ASC 718, Stock Compensation. The purchase price discount and the look-back feature cause the ESPP to be compensatory and the Company to recognize compensation expense. The compensation cost is recognized on a straight-line basis over the requisite service period. The Company values ESPP shares using the Black-Scholes model. The Company recognized compensation expense of $ 1,249 and $ 1,341 for the years ended December 31, 2024 and 2023, respectively. The Company did not recognize material compensation expense related to the ESPP for the year ended December 31, 2022. As of December 31, 2024, there was $ 449 of unrecognized non-cash share-based compensation expense related to the ESPP, which is expected to be recognized over the remaining offering period ending May 31, 2025. During the year ended December 31, 2024, 100,242 shares were issued under the ESPP. F-28 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 9. Net Loss Per Share Basic and diluted net loss per share attributable to common shareholders of Biohaven was calculated as follows: Year Ended December 31, 2024 2023 2022 Numerator: Net loss $ ( 846,422 ) $ ( 408,168 ) $ ( 570,279 ) Denominator: Weighted average common shares outstanding—basic and diluted 91,234,337 71,200,527 44,741,316 Net loss per share—basic and diluted $ ( 9.28 ) $ ( 5.73 ) $ ( 12.75 ) The Company's potential dilutive securities include share options which 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: Year Ended December 31, 2024 2023 2022 Options to purchase common shares 12,781,084 11,379,429 8,959,215 Warrants to purchase common shares 294,195 — — Restricted Share Units 277,221 — — 13,352,500 11,379,429 8,959,215 10. License, Acquisitions and Other Agreements The Company has entered into various licensing, developmental and acquisition agreements which provide the Company with rights to certain know-how, technology and patent rights. The agreements generally include upfront fees, milestone payments upon achievement of certain developmental, regulatory and commercial and sales milestones, as well as sales-based royalties, with percentages that vary by agreement. License and Other Agreements As of December 31, 2024, the Company has potential future developmental, regulatory, and commercial milestone payments under its license and other agreements of up to approximately $ 170,538 , $ 701,975 , and $ 3,185,450 , respectively. See below for a detailed discussion of these agreements. The Company has not recorded these potential contingent consideration payments as liabilities in the accompanying consolidated balance sheet as none of the future events which would trigger a milestone payment were considered probable of occurring at December 31, 2024. Yale Agreements In September 2013, the Company entered into an exclusive license agreement (the "Yale Agreement") with Yale University 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. The Yale Agreement was amended and restated in May 2019. As of December 31, 2024 under the Yale Agreement, the Company has remaining contingent regulatory milestone payments of up to $ 2,000 . The Yale Agreement includes an obligation to pay low single digit royalties on the net sales of 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 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 F-29 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 10. License, Acquisitions and Other Agreements (Continued) after the first sale of product under the agreement. If the Company grants any sublicense rights under the Yale Agreement, it must pay Yale University a low single-digit percentage of sublicense income that it receives. For the December 31, 2024, 2023, and 2022, the Company did no t record any material expense or make any milestone or royalty payments under the Yale Agreement. In January 2021, the Company entered into 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"). The platform pertains to the clearance of disease-causing protein and other biomolecules by targeting them for lysosomal degradation using multi-functional molecules. The Yale MoDE 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 MoDE Agreement, it must pay Yale University a low single-digit percentage of sublicense income that it receives. As of December 31, 2024, under the Yale MoDE Agreement, the Company has remaining contingent development and commercial milestone payments of up to $ 538 and $ 2,950 , respectively. The Yale MoDE 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 year ended December 31, 2024, the Company recorded research and development expense of $ 263 related to the achievement of developmental milestones under the Yale MoDE Agreement. The Company did no t record any material milestone or royalty payments under the Yale MoDE Agreement for the years ended December 31, 2023, and 2022. ALS Biopharma Agreement In August 2015, the Company entered into an agreement (the "ALS Biopharma Agreement") with ALS Biopharma and Fox Chase Chemical Diversity Center Inc. ("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. As of December 31, 2024, under the ALS Biopharma Agreement, the Company has remaining contingent regulatory approval milestone payments of up to $ 4,000 , as well as royalty payments of a low single-digit percentage based on net sales of products licensed under the ALS Biopharma Agreement, payable on a quarterly basis. 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 years ended December 31, 2024, 2023 and 2022, the Company did no t record any expense or make any milestone or royalty payments under the ALS Biopharma Agreement. Taldefgrobep Alfa License Agreement In February 2022, following the transfer of intellectual property, the Company announced that it entered into a worldwide license agreement with BMS for the development and commercialization rights to taldefgrobep alfa (also known as BMS-986089), a novel, Phase 3-ready anti-myostatin adnectin (the "Taldefgrobep Alfa License Agreement"). As of December 31, 2024, under the Taldefgrobep Alfa License Agreement, the Company has remaining contingent regulatory approval milestone payments of up to $ 200,000 , as well as tiered, sales-based royalty percentages from the high teens to the low twenties. There were no upfront or contingent payments to BMS related to the Taldefgrobep Alfa License Agreement. For the years ended December 31, 2024, 2023 and 2022, the Company did no t record any material expense or make any milestone or royalty payments under the Taldefgrobep Alfa License Agreement. Agreement with Hangzhou Highlightll Pharmaceutical Co. Ltd. In March 2023, the Company and Hangzhou Highlightll Pharmaceutical Co. Ltd. ("Highlightll") entered into an exclusive, worldwide (excluding People's Republic of China and its territories and possessions) license agreement (the F-30 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 10. License, Acquisitions and Other Agreements (Continued) "Highlightll Agreement") pursuant to which Biohaven obtained the right to research, develop, manufacture and commercialize Highlightll’s brain penetrant dual TYK2/JAK1 inhibitor program. In connection with the Highlightll Agreement, the Company was obligated to pay Highlightll a cash payment of $ 10,000 and 721,136 common shares (collectively, "the Highlightll Upfront Payments"), upon the completion of certain post-closing activities. In December 2023, the Company entered into a second amendment to the Highlightll Agreement, which granted the Company an exclusive option and right of first refusal to any Selective TYK2 Inhibitor being developed by or on behalf of Highlightll or its affiliates and provided for the payment of the Highlightll Upfront Payments. As a result, the Company made a $ 10,000 cash payment and issued 721,136 shares, valued at $ 21,814 , to Highlightll during the fourth quarter of 2023, which was recorded as R&D expense during the year ended December 31, 2023. As of December 31, 2024, under the Highlightll Agreement, the Company has remaining contingent development, regulatory approval, and commercial milestone payments of up to $ 75,000 , $ 37,500 , and $ 837,500 , respectively. Additionally, the Company has agreed to make tiered royalty payments as a percentage of net sales starting at mid single digits and peaking at low teens digits. During the royalty term, if the Company offers to include China clinical sites in its Phase 3 study sufficient for submission to Chinese National Medical Products Administration and Highlightll, at its sole discretion, agrees, then Highlightll will pay royalties in the low tens digits to the Company on China sales upon approval. The Highlightll Agreement terminates on a country-by-country basis upon expiration of the royalty term and can also be terminated if certain events occur, e.g., material breach or insolvency. Excluding the Highlightll Upfront Payments discussed above, for the years ended December 31, 2024 and 2023, the Company did no t record any material milestone or royalty payments related to the Highlightll Agreement. Other Agreements In addition to the agreements detailed above, the Company has entered into various other license agreements and development programs. The Company records milestones and other payments, including funding for research arrangements, which become due under these agreements to research and development expense in the consolidated statements of operations. Amounts recorded to research and development expense for the period were as follows: Year Ended December 31, 2024 2023 2022 Milestone Payments $ 1,875 $ 3,250 $ 75 Upfront Payments - Cash 6,000 — — Upfront Payments - Issuance of Common Shares* $ 8,554 $ — $ — * The 2024 amount represents $ 8,554 recorded to research and development expense related to shares owed for upfront payments which were not yet issued as of December 31, 2024 and is recorded within accrued expenses and additional paid in capital on the consolidated balance sheet as of December 31, 2024. Acquisitions Kv7 Platform Acquisition In April 2022, the Company closed the acquisition from Knopp of Channel Biosciences, LLC (“Channel”), a wholly owned subsidiary of Knopp owning the assets of Knopp’s Kv7 channel targeting platform (the “Kv7 Platform Acquisition”), pursuant to the Purchase Agreement, dated February 24, 2022. Under the Purchase Agreement, the Company agreed to make success-based payments based on developmental and regulatory milestones through approvals in the United States, Europe, the Middle East and Asia ("EMEA") and Japan for the lead asset, BHV-7000 (formerly known as KB-3061), developmental and regulatory milestones for the Kv7 pipeline development in other indications and additional country approvals, and commercial sales-based milestones of BHV-7000. Additionally, the Company agreed to make scaled royalty payments in cash for BHV-7000 and the pipeline programs, with percentages starting at high single digits and peaking at low teens for BHV-7000 and starting at mid-single digits and peaking at low tens digits for the pipeline programs. In May 2024, the Company entered into the Knopp Amendment under which the parties thereto agreed to replace the scaled high single digit to low teens royalty payment obligations with a flat royalty payment in the mid-single digits for BHV-7000 and the pipeline programs. The parties also agreed to reduce the success-based payments payable under the F-31 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 10. License, Acquisitions and Other Agreements (Continued) Purchase Agreement. The Company retains the ability to pay these contingent milestone payments in cash or in the Company's common shares at Biohaven's election, subject to the same increases if the Company elects to pay in the Company's common shares. As of December 31, 2024, under the Purchase Agreement, as amended, the Company had remaining success-based payments comprised of (i) to up to $ 185,000 based on regulatory approvals in the United States and EMEA for BHV-7000 and (ii) up to an additional $ 60,000 based on regulatory approval in the United States for the other Kv7 pipeline programs. In consideration of the revisions to the success-based payment and royalty payment obligations, the Company agreed to issue to Knopp 1,872,874 Company common shares, valued at approximately $ 75,000 , through a private placement within 60 days of the date of execution of the Knopp Amendment (the “2024 Additional Consideration”) and additional Company common shares with an approximate value of $ 75,000 within 60 days of the first anniversary of execution of the Knopp Amendment (the “2025 Additional Consideration”). The Company also gave Knopp the option to request a one-time cash true-up payment from the Company in December 2024 in the event that Knopp continues to hold the Company's common shares representing the 2024 Additional Consideration and the value of such shares has declined (the "2024 Knopp True-Up"), and a one-time cash true-up payment from the Company in December 2025 in the event that Knopp continues to hold the Company's common shares representing the 2025 Additional Consideration and the value of such shares has declined (the "2025 Knopp True-Up"), in each case, subject to certain conditions. The Company concluded that the agreement to issue the 2024 Additional Consideration at a future date represented a fixed forward contract under ASC 815 and classified the commitment as a forward contract liability on its consolidated balance sheet on the execution date of the Knopp Amendment. The Company initially measured the forward contract associated with the 2024 Additional Consideration at a fair value of $ 75,220 , which was recorded as R&D expense during the three months ended June 30, 2024 in its consolidated statements of operations. In May 2024, the Company issued the 2024 Additional Consideration at an approximate value of $ 65,981 . The Company recognized a gain of $ 9,239 for the year ended December 31, 2024 in other income, net in its consolidated statement of operations. The gain on settlement of the 2024 Additional Consideration was due to the decline in fair value of the 2024 Additional Consideration from the execution date to the issuance date due to a decline in Biohaven's share price. The 2024 Additional Consideration True-up represents a net cash settled written put option measured at fair value on a recurring basis. The Company has concluded that the 2024 Additional Consideration True-up represents a net cash settled written put option on the Company’s shares and is a freestanding derivative liability under ASC 815. Accordingly, the Company classified the 2024 Additional Consideration True-up as a current derivative liability on its consolidated balance sheet. The Company initially recorded the 2024 Additional Consideration True-up at a fair value of $ 15,540 , which was recorded as R&D expense during the three months ended June 30, 2024 in its consolidated statements of operations. The Company subsequently remeasured the fair value of the derivative liability and recognized any gains or losses through other income, net in its consolidated statement of operations. The 2024 Additional Consideration True-up was considered settled as of December 2024, with no cash payment due upon expiration. The Company recognized a gain related to the 2024 Additional Consideration True-Up of $ 15,540 for the year ended December 31, 2024 in other income, net in its consolidated statement of operations. Refer to Note 4, "Fair Value of Financial Assets and Liabilities" for further discussion. The Company has concluded that the agreement to issue the 2025 Additional Consideration at a future date represents a forward contract settleable in a variable number of shares under ASC 480, and classified the commitment as a current forward contract liability on its consolidated balance sheet. The Company initially measured the 2025 Additional Consideration at a fair value of $ 63,940 , which was recorded as R&D expense during the three months ended June 30, 2024 in its consolidated statement of operations. The Company subsequently remeasures the fair value of the forward contract liability and recognizes any gains or losses through other income, net in its consolidated statement of operations. The Company recognized expense of $ 7,560 for the year ended December 31, 2024 related to the remeasurement of the 2025 Additional Consideration. Refer to Note 4, "Fair Value of Financial Assets and Liabilities" for further discussion. The Company has concluded that the 2025 Additional Consideration True-up represents a net cash settled written put option on the Company’s shares and is a freestanding derivative liability under ASC 815. Accordingly, the Company classified the 2025 Additional Consideration True-up as a non-current derivative liability on its consolidated balance sheet. The Company initially recorded the 2025 Additional Consideration True-up at a fair value of $ 13,810 , which was recorded as R&D expense during the three months ended June 30, 2024. The Company subsequently remeasures the fair value of the derivative liability and recognizes any gains or losses through other income, net in its consolidated statement of operations. The Company recognized a gain of $ 600 for the year ended December 31, 2024 related to the 2025 Additional Consideration True-up. Refer to Note 4, "Fair Value of Financial Assets and Liabilities" for further discussion. F-32 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 10. License, Acquisitions and Other Agreements (Continued) As further consideration for the revisions to the success-based payment and royalty payment obligations in the Knopp Amendment, the Company issued to Knopp a warrant (the “Warrant”) to purchase 294,195 Company common shares at a purchase price per share of $ 67.98 , subject to certain specified development milestones and the Company achieving a specified market capitalization. Refer to Note 6, "Shareholders' Equity" for further discussion. The Company has not recorded any of the remaining contingent consideration payments to Knopp as a liability in the accompanying consolidated balance sheet as none of the future events which would trigger a milestone payment were considered probable of occurring at December 31, 2024. Pyramid Acquisition In January 2024, the Company acquired Pyramid Biosciences, Inc. (“Pyramid”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated January 7, 2024 ("the Pyramid Agreement"). In consideration for the Pyramid acquisition, Biohaven made an upfront payment of 255,794 Company common shares, valued at approximately $ 10,894 . The Company accounted for this purchase as an asset acquisition as substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset, IPR&D. The IPR&D asset has no alternative future use and relates primarily to BHV-1510. There was no material value assigned to any other assets or liabilities acquired in the acquisition. As such, the upfront payment discussed above was recorded as a charge to R&D expense in the accompanying consolidated statements of operations during the three months ended March 31, 2024. As of December 31, 2024, under the Pyramid Agreement, the Company has remaining success-based payments comprised of (i) up to $ 5,000 based on developmental and regulatory milestones for the lead asset, BHV-1510 (formerly known as PBI-410), (ii) up to an additional $ 30,000 based on developmental and regulatory milestones for a second asset (formerly known as PBI-200) and (iii) up to $ 40,000 for commercial sales-based milestones of BHV-1510. Contingent developmental and regulatory milestone payments may be paid in cash or Biohaven common shares at the election of Biohaven and commercial sales-based milestones are to be made in cash. The Company has not recorded any of the remaining contingent consideration payments as a liability in the accompanying consolidated balance sheet as none of the future events which would trigger a milestone payment were considered probable of occurring at December 31, 2024. During the first quarter of 2024, the Company recorded $ 5,689 of R&D expense in the consolidated statement of operations for a developmental milestone which became due under the Pyramid Agreement, to be paid in 98,129 common shares of the Company. See Note 6, "Shareholders' Equity" for discussion of common shares issued to as part of the Pyramid Agreement. 11. Commitments and Contingencies All consideration paid by the Former Parent in association with the following agreements, certain of which were assigned by the Former Parent to the Company in connection with the Spin-Off, during the periods prior to the Separation is recorded in the consolidated financial statements of the Company. Lease Agreements The Company's leases primarily consist of lab and office space for use in its operations. It's leases generally have initial lease terms of 1 to 10 years, some of which include options to extend for up to 5 to 10 years or on a month-to-month basis. As of December 31, 2024, none of the Company's lease terms included the extension option as the Company has determined that it is unlikely to exercise the extension option. For periods prior to Separation, lease costs were allocated to the Company based on a proportional cost allocation method. Actual operating lease cost and allocated operating lease cost for periods prior to Separation was $ 5,884 , $ 5,874 and $ 1,158 for the years ended December 31, 2024, 2023 and 2022, respectively. The Company currently has one short-term real estate lease with immaterial lease expense. The Company had immaterial sublease income and there are no sale-leaseback transactions. Certain of the Company’s lease agreements contain variable lease payments that are adjusted for actual operating expense true-ups compared with estimated amounts; however, these amounts are immaterial. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. F-33 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 11. Commitments and Contingencies (Continued) The following table summarizes supplemental cash flow information: Years Ended December 31, 2024 2023 2022 Right-of-use assets obtained in exchange for new operating lease liabilities $ 8,492 $ — $ 31,342 Right-of-use asset obtained in exchange for modified operating lease liability $ 456 $ — $ — Operating cash flows paid for operating leases were $ 5,114 , $ 4,854 and $ 780 for the years ended December 31, 2024, 2023 and 2022. Supplemental balance sheet information related to leases is as follows: In thousands, except remaining lease term and discount rate December 31, 2024 December 31, 2023 Assets Other non-current assets $ 36,391 $ 31,385 Liabilities Other current liabilities $ 3,802 $ 3,308 Long-term operating lease liability 32,782 27,569 $ 36,584 $ 30,877 Weighted average remaining lease term (in years) 7.94 8.21 Weighted average discount rate 7.59 % 6.47 % The following table summarizes maturities of operating lease liabilities as of December 31, 2024: Operating leases 2025 $ 6,135 2026 6,183 2027 5,844 2028 5,325 2029 5,485 Thereafter 20,332 Total lease payments 49,304 Less: imputed interest ( 12,720 ) Total lease liabilities $ 36,584 Pittsburgh Centre Avenue Lease Agreement In March 2024, the Company entered into a lease agreement in Pittsburgh, Pennsylvania for lab space (the "Pittsburgh Centre Avenue Lease"), which will be used to support the research and development of the Company's ion channel platform and replace the Company's current operating lease in Pittsburgh. The lease is expected to commence in mid 2025 after substantial completion of building improvements to lessor assets, and has a term of 122 months, with an option to extend for one additional period of 60 months. The Company expects to record the Pittsburgh Centre Avenue Lease as an operating lease. The Company has annual commitments relating to the Pittsburgh Centre Avenue Lease ranging from $ 1,859 to $ 2,373 , excluding any additional tenant improvement allowance that would increase the base rent. Research Commitments The Company has entered into agreements with several CROs to provide services in connection with the Company’s preclinical studies and clinical trials. As of December 31, 2024, the Company had no research commitments in excess of one year. F-34 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 11. Commitments and Contingencies (Continued) 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 members of its board of directors and executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service. 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 specific 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 consolidated financial statements as of December 31, 2024 or December 31, 2023. License, Acquisitions, and Other Agreements The Company has entered into license, developmental, and acquisition agreements with various parties under which it is obligated to make contingent and non-contingent payments. See Note 10, "License, Acquisitions and Other Agreements," for additional details. Other Agreements On January 1, 2021, the Company entered into a consulting services agreement (the "Moda Agreement") with Moda Pharmaceuticals LLC ("Moda") 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 agreed to make success-based payments based on developmental, regulatory and commercial milestones. 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. In August 2023, the Company entered into an amendment to the Moda Agreement with Moda. As of December 31, 2024, under the Moda Agreement, as amended, the Company had remaining contingent development, regulatory approval, and commercial milestone payments of up to $ 31,245 , $ 22,000 , and $ 104,612 , respectively. For the year ended December 31, 2024, the Company recorded research and development expense of $ 2,125 related to developmental milestones under the Moda Agreement. The Company did not record any material research and development expense or make any milestone payments related to the Moda Agreement for the years ended December 31, 2023 and 2022. 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 December 31, 2024, there were no matters which would have a material impact on the Company’s financial results. 12. Income Taxes As a company incorporated in the British Virgin Islands (“BVI”), the Company is principally subject to taxation in the BVI. Under the current laws of the BVI, the Company and all dividends, interest, rents, royalties, compensation and other amounts paid by the Company to persons who are not resident in the BVI and any capital gains realized with respect to any shares, debt obligations, or other securities of the Company by persons who are not resident in the BVI are exempt from all provisions of the Income Tax Ordinance in the BVI. The Company, including the Former Parent for periods prior to the Separation, has historically outsourced all of the research and clinical development for its programs under a master services agreement with Biohaven Pharmaceuticals, Inc. (“BPI”). As a result of providing services under this agreement, BPI was profitable during the years ended December 31, 2024, 2023 and 2022. A similar arrangement is also in place for the Company's subsidiary, Biohaven Biosciences F-35 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 12. Income Taxes (Continued) Ireland Limited ("BBIL"). The Companies are subject to taxation in the United States and Ireland, respectively, and the Company's tax provision includes the effects of consolidating the results of operations of BPI and BBIL. At December 31, 2024 and 2023, the Company continued to maintain a full valuation allowance against its net deferred tax assets, which are comprised primarily of net operating loss carryforwards, research and development tax credit carryforwards and capitalized research and development deductions, based on management’s assessment that it is more likely than not that the deferred tax assets will not be realized. The Company will continue to evaluate the need for a valuation allowance on its deferred tax assets until there is sufficient positive evidence to support the reversal of all or some portion of these allowances. The Company recorded an income tax provision during the year ended December 31, 2024 of $ 735 , an income tax benefit during the year ended December 31, 2023 of $ 1,383 , and an income tax provision during the year ended December 31, 2022 of $ 438 , which primarily represent Federal and state taxes related to the Company’s profitable operations in the U.S. and Ireland. Loss before provision for income taxes consisted of the following: Year Ended December 31, 2024 2023 2022 BVI $ ( 885,508 ) $ ( 424,647 ) $ ( 598,046 ) Foreign 39,821 15,096 28,205 Loss before provision for income taxes $ ( 845,687 ) $ ( 409,551 ) $ ( 569,841 ) The provision for income taxes consisted of the following: Year Ended December 31, 2024 2023 2022 Current income tax provision (benefit): BVI $ — $ — $ — Foreign 735 ( 1,383 ) 438 Total current income tax provision (benefit) 735 ( 1,383 ) 438 Deferred income tax provision (benefit): BVI — — — Foreign — — — Total deferred income tax provision (benefit) — — — Total provision (benefit) for income taxes $ 735 $ ( 1,383 ) $ 438 A reconciliation of the BVI statutory income tax rate of 0% to the Company's effective income tax rate is as follows: Year Ended December 31, 2024 2023 2022 BVI statutory income tax rate 0.0 % 0.0 % 0.0 % Foreign tax rate differential 0.8 1.3 ( 12.6 ) Tax credits ( 3.3 ) ( 12.7 ) ( 5.8 ) Change in valuation allowance 2.7 10.6 18.5 Other ( 0.1 ) 0.5 0.0 Effective income tax rate 0.1 % ( 0.3 ) % 0.1 % The Company's income tax provision primarily represents Federal and state taxes related to the profitable operations of its subsidiaries in the United States and Ireland. The income tax benefit recorded during the year ended December 31, 2023 was primarily attributable to the adoption of the guidance contained in a Notice of Proposed Rule Making issued by the United States Internal Revenue Service during the third quarter of 2023 ("the Notice"). The Notice F-36 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 12. Income Taxes (Continued) indicates that BPI has the ability to immediately deduct R&D expenditures which were incurred in the U.S. and reimbursed by its foreign parent. Previously these expenditures were capitalized, as was generally required under the Tax Cuts and Jobs Act, which was effective for tax years beginning on or after January 1, 2022. Based on this guidance and its application to the Company's specific facts, Biohaven deducted these expenditures on its 2022 tax return, substantially reducing its taxable income in the U.S. and capitalized R&D expenditures, resulting in an increase to its federal net operating loss carryforward of $ 598,679 that can be carried forward indefinitely. The Company's adoption of the Notice in 2023 also increased its State net operating losses, resulting in the reversal of $ 800 of state income taxes recorded in 2022. Net deferred tax assets (liabilities) consisted of the following: December 31, 2024 2023 Deferred tax assets: Foreign net operating loss carryforwards $ 144,179 $ 138,480 Tax credits 140,201 111,660 R&D capitalization 5,891 887 Other 21,878 15,944 Valuation allowance ( 303,731 ) ( 259,448 ) Total deferred tax assets 8,418 7,523 Deferred tax liabilities: Other ( 8,418 ) ( 7,523 ) Total deferred tax liabilities ( 8,418 ) ( 7,523 ) Net deferred tax asset (liability) $ — $ — As of December 31, 2024 and 2023, the Company had foreign net operating loss carryforwards of $ 890,792 and $ 847,582 , respectively. As of December 31, 2024 and 2023, the Company had federal and state research and development and orphan drug credits of $ 140,201 and $ 111,660 , respectively, which begin to expire in 2035. Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2024 and 2023 were due primarily to the acquisition of Pyramid and offset by the utilization of net operating losses and tax credit carryforwards. The change in the valuation allowance for deferred tax assets during the year ended December 31,2022 was due primarily to generation of nondeductible research expenses and tax credit carryforwards. Year Ended December 31, 2024 2023 2022 Valuation allowance as of beginning of year $ 259,448 $ 216,061 $ 54,224 Increases recorded to Purchase Accounting and Net Investment from Former Parent 21,538 — 50,905 Increases recorded to income tax provision 22,745 43,387 110,932 Valuation allowance as of end of year $ 303,731 $ 259,448 $ 216,061 The Company followed the authoritative guidance for recognizing and measuring uncertainty in income taxes for tax positions taken or expected to be taken in a tax return. F-37 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 12. Income Taxes (Continued) The beginning and ending amounts of unrecognized tax benefits reconciles as follows: Year Ended December 31, 2024 2023 2022 Beginning of period balance $ 2,200 $ 2,200 $ 3,800 Increase for tax positions taken during the current period 100 — — Decrease recorded to Purchase Accounting and Net Investment from Former Parent — — ( 1,600 ) End of period balance $ 2,300 $ 2,200 $ 2,200 The unrecognized tax benefits relate primarily to issues common among multinational corporations. All of these unrecognized tax benefits, if recognized, would impact the Company's effective income tax rate. The Company's policy is to record interest and penalties related to income taxes, if any, as part of its income tax provision. As of December 31, 2024 and 2023, the total amount of accrued interest and penalties was not significant. BPI, Kleo and Pyramid file income tax returns in the U.S. and certain state jurisdictions. The U.S. federal and state income tax returns are generally open to tax examinations for the tax year ended December 31, 2021 and subsequent years. BPI and Kleo are under exam by the State of Connecticut for the tax years December 31, 2017 and forward. 13. Related Party Transactions Related Party Agreements License Agreements with Yale On September 30, 2013, the Company entered into the Yale Agreement with Yale (see Note 10, "License, Acquisitions and Other Agreements," for details). The Company’s Chief Executive Officer is one of the inventors of the patents that the Company has licensed from Yale and, as such, is entitled to a specified share of the glutamate product-related royalty revenues that may be received by Yale under the Yale Agreement. In January 2021, the Company entered into the Yale MoDE Agreement with Yale (see Note 10, "License, Acquisitions and Other Agreements," for details). Under the license agreement, the Company acquired exclusive, worldwide rights to Yale's intellectual property directed to its MoDE platform. Under the Yale MoDE Agreement, the Company entered into the Yale MoDE SRA (see Note 10, "License, Acquisitions and Other Agreements," 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 years ended December 31, 2024, 2023 and 2022, the Company recorded $ 1,864 , $ 2,942 and $ 3,420 , 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 (collectively, the "Yale Agreements"). As of December 31, 2024, the Company did not owe any material amounts to Yale. Relationship with the Former Parent Upon the effectiveness of the Separation on October 3, 2022, the Former Parent ceased to be a related party to the Company and accordingly, no related party transactions or balances are reported subsequent to October 3, 2022. On October 3, 2022, the Company entered into agreements with the Former Parent in connection with the Separation, including a Transition Services Agreement. For a full discussion of agreements entered into with the Former Parent, refer to Note 14, "Related Party Transactions" to the consolidated financial statements included in the 2023 Form 10-K. The Company did not record any material income for transition services provided to the Former Parent during the year ended December 31, 2024. For the years ended December 31, 2023 and 2022 the Company recorded $ 9,250 and $ 4,024 , respectively, in other income reflecting transition services provided to 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. F-38 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 13. Related Party Transactions (Continued) Prior to the Separation, the Company did not historically operate as a standalone business and the consolidated financial statements are 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 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 consolidated statement of operations as follows: Year Ended December 31, 2022 Research and development $ 146,521 General and administrative 82,744 Total $ 229,265 Management believes these cost allocations are a reasonable reflection of services provided to, or the benefit derived by, the Company during the periods 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 As discussed in Note 8, "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, including those related to the Acceleration, have been allocated to the Company and recorded in research and development and general and administrative expenses in the consolidated statements of operations for periods prior to the Separation. F-39 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 13. Related Party Transactions (Continued) 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: Year Ended December 31, 2022 (1) General financing activities $ 399,231 Corporate cost allocations, excluding non-cash share-based compensation 49,899 Net transfers from Former Parent as reflected in the Consolidated Statement of Cash Flows 449,130 Non-cash share-based compensation 179,367 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 Separation related adjustments (2) 27,811 Other non-cash adjustments ( 204 ) Net transfers from Former Parent as reflected in the Consolidated Statement of Changes in Equity $ 776,630 (1) The amounts for the year ended December 31, 2022 represent activity through the date of Separation. (2) Refer to Note 1, "Nature of the Business and Basis of Presentation," for further details on separation related adjustments. 14. Segment Information The Company manages its operations as a single segment, focused on the discovery, development, and commercialization of life-changing treatments in key therapeutic areas, including immunology, neuroscience, and oncology. Our Chief Executive Officer (“CEO”), as the Company's chief operating decision maker, manages and allocates resources at a consolidated level. Our CEO uses net loss that is also reported on the consolidated statement of operations as net loss to assess performance and decide how to allocate resources. The CEO uses net loss to evaluate the allocation of resources across functions, therapeutic areas, and research and development projects in line with our overarching long-term company-wide strategic goals as well as to monitor budget versus actual results. The accounting policies of the Company's single operating segment are the same as those described in the summary of significant accounting policies as described in Note 2. The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets. In 2024 and 2023, materially all the Company's long-lived assets were held in the United States. Expenditures for the addition of long-lived assets are reported on the consolidated statements of cash flows as purchases of property and equipment. F-40 BIOHAVEN LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except share and per share amounts) 14. Segment Information (continued) Additional information about segment profit or loss and significant segment expenses is as follows: Year Ended December 31, 2024 2023 2022 Direct R&D program expense BHV-4157 (Troriluzole) $ 63,983 $ 73,080 $ 58,769 BHV-2000 (Taldefgrobep Alfa) 59,710 40,870 16,799 BHV-7000 & BHV-7010 (Kv7) 136,422 47,327 131,956 BHV-2100 (TRPM3 Antagonist) 29,044 12,865 8,255 BHV-8000 (TYK2/JAK1) 12,697 39,025 — BHV-1300 (IgG Degrader) 30,078 22,239 — BHV-1310 (IgG Degrader) 13,341 1,962 — BHV-1400 (IgA Degrader) 19,572 1,810 — BHV-1600 (β1-AR AAB Degrader) 14,650 254 — BHV-1510 (Trop2) 28,540 — — BHV-1530 (FGFR3) 14,554 — — Other R&D program expense 2,821 5,615 21,207 Preclinical research programs R&D Expense 57,181 35,911 18,116 R&D personnel expense (excluding share-based compensation) (1) 73,644 60,058 53,743 R&D Share-based compensation expense 42,594 15,985 116,379 R&D Knopp amendment expense 171,850 — — G&A personnel expense (excluding share-based compensation) (1) 24,894 21,087 20,164 G&A Share-based compensation expense 29,369 12,802 77,177 Other segment items (2) 60,167 45,161 45,367 Non-operating (income) expense ( 39,424 ) ( 26,500 ) 1,909 Provision (benefit) for income taxes 735 ( 1,383 ) 438 Segment net loss 846,422 408,168 570,279 Reconciliation of profit or loss Adjustments and reconciling items — — — Consolidated net loss $ 846,422 $ 408,168 $ 570,279 (1) Personnel expense includes employee payroll, bonus, and employee benefits for medical care, retirement, insurances and other. (2) Other segment items included in Segment net loss include unallocated non-program R&D expense, legal, accounting and other professional service fees, rent and utilities expense, depreciation, and other corporate expenses. F-41