Bristol Myers to buy schizophrenia drugmaker Karuna Therapeutics for $14 bn

Bristol Myers Squibb on Friday agreed to acquire Karuna Therapeutics, a pioneer in schizophrenia drugs, for $330 per share in cash, or $14 billion in total equity value. The net cost of acquisition is estimated at $12.7 billion.

The acquisition will help Bristol Myers pursue growth with promising new type of antipsychotic medicine as patents on its older drugs expire in a few years.

The boards of both Bristol Myers Squibb and Karuna Therapeutics have unanimously approved the transaction.

Karuna is a biopharmaceutical company engaged in the development and production of transformative medicines for the treatment of psychiatric and neurological conditions. Karuna’s lead product, KarXT (xanomeline-trospium), is an antipsychotic with a novel action, and differentiated efficacy and safety features.

Karuna has moved the US FDA with a New Drug Application (NDA) for KarXT - for the treatment of schizophrenia in adults. The NDA is expected to be ready for prescription by September 2024. KarXT is also in registrational trials both for adjunctive therapy to existing drugs for schizophrenia and for the treatment of psychosis in patients with Alzheimer’s disease. 

Going forward, Bristol Myers expects KarXT to contribute significantly to its revenues. 

“We expect KarXT to enhance our growth through the late 2020s and into the next decade,” said Christopher Boerner, chief executive officer of Bristol Myers Squibb. 

“Karuna’s portfolio offers advancements in treatment not seen in many years. With Bristol Myers Squibb’s long-standing expertise in developing and commercializing medicines on a global scale and legacy in neuroscience, KarXT and the other assets in our pipeline will be well-positioned to reach those living with schizophrenia and Alzheimer’s disease psychosis,” Bill Meury, president and chief executive officer of Karuna Therapeutics, said,

On an average, about 1.6 million people are treated for schizophrenia in the US, and currently available drugs offer no solution to patients, but have major side effects.

Adjunctive schizophrenia: A registrational clinical trial is currently underway evaluating KarXT as adjunctive treatment with current standard of care agents for the treatment of schizophrenia, with data expected in 2025.

KarXT is currently undergoing registrational clinical trials for the treatment of Alzheimer’s disease psychosis, with data expected in 2026. There are an estimated 6 million people living with Alzheimer’s disease in the US, but there are no approved drugs for patient care at present.

Bristol Myers Squibb expects the transaction to contribute approximately $0.30 to its non-GAAP diluted earnings per share in 2024.The company plans to offset operational expenses of the transaction through continued resource allocation, cost efficiencies and portfolio prioritisation. 

Bristol Myers Squibb plans to finance the acquisition with primarily new debt issuance. 

Under the terms of the merger agreement, Bristol Myers Squibb will acquire all outstanding shares of Karuna common stock for $330 per share in cash, at a premium of about 53 per cent to its closing stock price on 21 December 2023.

The transaction is expected to close in the first half of 2024, subject to customary closing conditions, including approval of Karuna stockholders and receipt of required regulatory approvals, the companies stated in their joint release.