By Manas Mishra

(Reuters) – Pfizer Inc (NYSE) has raised expectations about Wall Street’s acceptance of a $11.6 million deal to buy migraine specialist Biohaven Pharma. This is as cash-flush drugmakers seek out smaller, less-profitable biotechs.

This deal was announced Tuesday and is the largest in the sector this year. It also ends the dearth of large acquisitions.

“One weight on the sector has been a relative lack of M&A of late … and we think this news may be just what the doctor ordered to restore sentiment,” Piper Sandler analyst Christopher Raymond said.

Biotechs are coming off their worst April since 2002, and the crash in valuation has made them attractive M&A targets, especially when small drugmakers are grappling with a cash crunch, analysts say.

Graphic: Biotech index on track to give up most of its pandemic gains – https://fingfx.thomsonreuters.com/gfx/mkt/klvyklwxovg/Biotech%20index%20chart.JPG Wells Fargo (NYSE:) Analyst Mohit Bansal also identified Biohaven (NASDAQ:), Vir Biotechnology and Intellia Therapeutics as targets in February.

Reuters did not receive a response from the companies immediately.

Pfizer provided a 78.6% Premium, which is $148.50 for Biohaven shares, however this was lower than the $151.51 Biohaven shares were trading at before the long-running selloff.

The COVID-19 products have been a boon to drugmakers, such as Moderna (NASDAQ:) BioNTech and Inc have both indicated that they have sufficient cash to make deals.

Moderna closed the quarter with $19.3 billion in cash, and BioNTech reported a cash position of around 10 billion euros ($10.55 trillion).

But there has not been “a fundamental shift in seller expectations as of this point,” Merck & Co Inc Chief Executive Officer Robert Davis said last month.

There are smaller players who have cash problems. This is where you might see the most movement.