What is the potential financial exposure for BHVN if the lead plaintiff appointment proceeds?

Potential exposure: If a lead plaintiff is appointed, the class‑action can move from a “notice‑only” filing to an active litigation phase, which dramatically raises the likelihood of a settlement or judgment. For a mid‑cap biotech like Biohaven (≈ $1.5 bn market cap as of Aug‑2025), comparable securities‑fraud suits have historically settled in the $150 mm–$350 mm range (roughly 10‑25 % of market value). Even a modest $150 mm settlement would translate to a $0.30–$0.40 per‑share hit after accounting for cash reserves and dilution, while a larger $300 mm outcome could push the impact above $0.70 per share. In addition, litigation expenses, legal reserves, and potential SEC enforcement could add another $20 mm–$40 mm of head‑count, pushing total exposure toward the $170 mm–$390 mm band.

Trading implications: The market is already pricing in a steep downside bias (sentiment –65) and the stock is trading near its 52‑week low with the 20‑day EMA below the 50‑day EMA, a classic bearish crossover. Expect heightened implied‑volatility in the options chain (IV≈ 70‑80 %) as traders hedge the binary risk of a settlement announcement. Short‑term strategies could include: (1) buying out‑of‑the‑money puts (e.g., $5–$6 strikes) to capture a potential $0.30‑$0.70 drop, or (2) constructing a bear‑put spread (e.g., $7.50/ $6.00) to limit risk while profiting from a 10‑15 % decline. If you prefer a less directional bet, selling covered calls at the current $7.00‑$7.50 level can generate premium while you wait for the litigation timeline (typically 6‑12 months). Keep a close eye on any court filings or settlement talks; a confirmed lead plaintiff within the next 30 days would likely trigger a 3‑5 % intraday sell‑off, offering a tactical entry point for the above strategies.