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2023-12-25| M&A

Bristol Myers Squibb Acquires Karuna Therapeutics to Enhance Neuroscience Portfolio

by Oscar Wu
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Bristol Myers Squibb (BMY) and Karuna Therapeutics, Inc. (KRTX) have announced a definitive merger agreement, with Bristol Myers Squibb acquiring Karuna for $330.00 per share, totaling an equity value of $14.0 billion. This strategic acquisition, approved by both companies’ Boards of Directors, is set to significantly strengthen Bristol Myers Squibb’s position in neuroscience.

KarXT: A Novel Treatment for Schizophrenia and Alzheimer’s Disease Psychosis

Karuna’s lead asset, KarXT, is a pioneering M1/M4 muscarinic receptor agonist, showing promise in treating schizophrenia and Alzheimer’s disease psychosis. With a Prescription Drug User Fee Act (PDUFA) date set for September 26, 2024, KarXT is anticipated to launch in the U.S. for treating adult schizophrenia. It is also undergoing trials for adjunctive therapy in schizophrenia and as a first-in-disease treatment for Alzheimer’s disease psychosis.

KarXT, with its unique mechanism and safety profile, offers significant revenue potential in schizophrenia treatment and other neuropsychiatric and neurodegenerative indications. It is expected to contribute substantially to Bristol Myers Squibb’s growth in the late 2020s and beyond.

Transaction Details and Financial Impact

The acquisition, expected to close in the first half of 2024, is subject to customary closing conditions and regulatory approvals. It is anticipated to be dilutive to Bristol Myers Squibb’s non-GAAP diluted earnings per share by approximately $0.30 in 2024 due to financing costs. However, Bristol Myers Squibb plans to manage operational expenses through resource allocation and cost efficiencies. The acquisition will be financed primarily through new debt issuance, with Bristol Myers Squibb maintaining its commitment to strong investment-grade credit ratings and shareholder distributions.

Christopher Boerner, Ph.D., CEO of Bristol Myers Squibb, and Bill Meury, CEO of Karuna Therapeutics, expressed optimism about the acquisition’s potential to address significant unmet medical needs in schizophrenia and Alzheimer’s disease psychosis. The merger is seen as a testament to Karuna’s innovation and aligns with Bristol Myers Squibb’s strategic focus on expanding its neuroscience portfolio.

About Bristol Myers Squibb

Bristol-Myers Squibb Company is a global biopharmaceutical company with a focus on discovering, developing, and delivering innovative medicines for patients facing serious diseases in areas such as oncology, immunology, cardiovascular, and neurology. The company’s principal strategy is to combine the resources, scale, and capability of a pharmaceutical company with the speed and focus on innovation of the biotech industry.

In terms of financials, Bristol-Myers Squibb has a market cap of $104.5 B and it has a strong profitability profile with positive margins across various categories.

About Karuna Therapeutics

Karuna Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing transformative medicines for psychiatric and neurological conditions. Their lead product candidate, KarXT, is in Phase III clinical trials for the treatment of acute psychosis in patients with schizophrenia and for the treatment of central nervous system disorders.

The company has a strong pipeline and strategic partnerships with Eli Lilly and Company, Zai Lab, PureTech Health LLC, Charles River Laboratories, and PsychoGenics, Inc. In terms of financials, Karuna Therapeutics has a market cap of $12.0 B.

References:

1.https://news.bms.com/news/corporate-financial/2023/Bristol-Myers-Squibb-Strengthens-Neuroscience-Portfolio-with-Acquisition-of-Karuna-Therapeutics/default.aspx

2.https://karunatx.com/pipeline-programs/karxt/

3.https://www.psychiatrist.com/news/emergent-trial-data-for-karxt-shows-promise-in-schizophrenia/

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