What happened

Shares of Biohaven Ltd. (BHVN -0.77%) were soaring 12.7% as of 11:23 a.m. ET on Tuesday after skyrocketing as much as 21.4% earlier in the day. The big gain came after Pfizer (PFE -1.82%) completed its acquisition of Biohaven Pharmaceutical on Monday. 

This transaction could be somewhat confusing. Immediately before the close of Pfizer's acquisition, Biohaven Pharmaceutical spun off Biohaven Ltd. as a new company. The "old" Biohaven, with its migraine drugs Nurtec ODT and zavegepant, became a wholly owned subsidiary of Pfizer. The "new" Biohaven retained the previous management team, along with a pipeline focusing on neuroscience and rare diseases.

So what

Investors clearly appear to be optimistic about the prospects for the "new" Biohaven. The newly formed company begins its journey with a strong financial position. Biohaven has no debt and around $257.8 million in cash. The company also has the top executives that led the original Biohaven to successfully develop and commercialize the market-leading migraine drug Nurtec ODT. 

What Biohaven doesn't have now is an approved drug on the market. The company's pipeline includes eight clinical-stage programs, plus several others in preclinical development. Biohaven is evaluating two experimental drugs in late-stage clinical studies. Taldefgrobep alfa targets spinal muscular atrophy. Troriluzole is in two phase 3 studies targeting spinocerebellar ataxias (a group of rare genetic conditions) and obsessive-compulsive disorder.

Now what

Whether this new biotech stock can keep the momentum going will depend largely on its pipeline progress. Biohaven has brought several new leaders on board to help achieve clinical success. In particular, Bruce Car was named as the company's chief scientific officer. Car previously served in the same role at Agios Pharmaceuticals