Biohaven (BHVN) stock tumbled for the second day running Tuesday after its bipolar mania treatment failed in a three-week study.

Analysts called the stock reaction overdone, while Chief Executive Vlad Coric blamed action in the broader market after President Donald Trump followed through on his threat to levy 25% tariffs on imports from Canada and Mexico and a 20% tariff on Chinese imports. The Dow Jones and other major indexes took heavy hits, while the biotech industry group fell a collective 0.6%.

In Biohaven's case, Coric said investors had low expectations heading into the readout of its study testing BHV-7000 in patients with bipolar mania. The drug works by activating Kv7, a channel that regulates electrical impulses and neurotransmitter release between neurons. The approach hasn't been validated in bipolar mania.

The "lowest risk and highest (possible) win" for BHV-7000 is in patients with epilepsy and depression, where there have been previous proofs of concept, Coric told Investor's Business Daily. "No one has had proof in bipolar before, so I don't think there's been an overfocus on bipolar."

Still, in midday trades, Biohaven stock slumped more than 4% to 30.60. But shares recuperated somewhat from a 12.6% drop in earlier action. That followed a 13.8% dive on Monday.

Depression, Epilepsy In Focus

Biohaven is now moving ahead with BHV-7000 in patients with depression in epilepsy. Results from those studies are expected in the second half of this year and the first half of 2026, respectively.

RBC Capital Markets analyst Leonid Timashev was cautious heading into the bipolar mania readout.

"We had been more cautious on the bipolar readout given more limited evidence for the Kv7 mechanism in mania," he said in a report. "We are somewhat surprised by the magnitude of the pullback as we sensed expectations were relatively modest for the data, and we do not believe there are clear read-throughs from mania to depression or epilepsy."

He rates Biohaven stock an outperform with a 61 price target. He models $700 million in peak-year sales of BHV-7000 in depression treatment and $1 billion for the epilepsy space.

Degrader Promise Remains

In more promising news, Biohaven said another one of its drugs, BHV-1300, decreased IgG levels by a median of 80% after four weekly shots. IgG, or immunoglobulin G, is an antibody that controls infection. But IgG can become too elevated, causing numerous autoimmune diseases.

The company declined to say which patients it enrolled in the BHV-1300 study, citing competitive concerns.

Immunovant (IMVT) and Argenx (ARGX) have drugs that impact FcRn, a protein that helps maintain levels of IgG in the blood. Biohaven is taking a different tact. BVH-1300 degrades IgG itself.

The 80% median reduction in IgG is competitive with Immunovant and Argenx, William Blair analyst Sarah Schram said in a report. Immunovant's IMVT-1402 reduced IgG by 74% with weekly dosing, while Argenx's approved drug, Vyvgart, lowered IgG by 66% in patients with myasthenia gravis, an immune condition that affects how the nerves communicate with muscles.

But Biohaven has to use a higher dose of BHV-1300 to achieve that level of IgG reduction. So far, there haven't been any safety signals, Leerink Partners analyst Marc Goodman said. BHV-1300 works in the liver, which is where side effects would first appear.

"But this liver safety issue for investors will remain," he said.

He kept his outperform rating on Biohaven stock.

Biohaven is planning to start a study in patients with Graves disease in mid-2025.

$4 Billion In Potential Sales

Coric, the CEO, said the safety issue should be a nonstarter for investors now that the company has released Phase 1 data. The company tested four weekly 1,000-milligram doses of its drug. It has now administered up to 2,000 milligrams in one shot.

Notably, Biohaven's drug is a small molecule. This makes it easier to administer with an autoinjector, Coric said. In comparison, the drugs from Argenx and Immunovant are monoclonal antibodies. They need hyaluronidase, an added enzyme that allows large volumes of liquid to be administered with an under-the-skin shot. Even then, Argenx's shot must be administered slowly, he said.

"We have a distinct advantage," he added.

Biohaven used its MoDE technology to develop BHV-1300. It licensed the tech from Yale University out of the Spiegel Lab. This is a platform for degrading proteins.

RBC's Timashev is bullish on the outlook for Biohaven's MoDE-based programs.

"We like the way the opportunity for the MoDE platform is starting to take shape with $4B in potential out-year sales," he said.

Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.

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