BMS Strengthens Neuroscience Portfolio with Karuna Acquisition

Bristol Myers Squibb (BMS) has agreed to acquire Karuna Therapeutics, Inc. for $14 billion.

Karuna is a biopharmaceutical company that develops and delivers medicines for people living with psychiatric and neurological conditions. Karuna’s lead asset, KarXT (xanomeline-trospium), is an antipsychotic with a novel mechanism of action (MoA) and differentiated efficacy and safety.

Karuna’s New Drug Application (NDA) for KarXT for the treatment of schizophrenia in adults was accepted for review by the U.S. Food and Drug Administration (FDA), with a Prescription Drug User Fee Act (PDUFA) date of September 26, 2024. KarXT is also in registrational trials both for adjunctive therapy to existing standard of care agents in schizophrenia and for the treatment of psychosis in patients with Alzheimer’s disease.

BMS believes KarXT represents a significant revenue contribution opportunity. It also sees potential from Karuna’s early-stage and pre-clinical pipeline.

“There are tremendous opportunities in neuroscience, and Karuna strengthens our position and accelerates the expansion and diversification of our portfolio in the space. We expect KarXT to enhance our growth through the late 2020s and into the next decade,” said Christopher Boerner, Ph.D., CEO of Bristol Myers Squibb. “This transaction fits squarely within our business development priorities of pursuing assets that are strategically aligned, scientifically sound, financially attractive, and have the potential to address areas of significant unmet medical need. We look forward to welcoming the talented Karuna team to BMS.”

“Schizophrenia and Alzheimer’s disease psychosis affect millions of people worldwide, with limited to no treatment options. KarXT’s novel mechanism has resulted in a transformational profile in schizophrenia, with compelling efficacy and a differentiated safety profile,” said Samit Hirawat, M.D., executive vice president, chief medical officer, drug development of BMS. “KarXT also has the potential to deliver meaningful benefits to patients as an adjunctive treatment for patients with schizophrenia and as a first treatment for Alzheimer’s disease psychosis.”

Bill Meury, President and CEO of Karuna Therapeutics, said, “Karuna’s portfolio offers advancements in treatment not seen in many years. With BMS’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. This announcement is a testament to the Karuna team’s talent, hard work, and innovation.”

KarXT targets both the M1 and M4 muscarinic receptors, resulting in a differentiated safety and efficacy profile. KarXT has demonstrated improvements in cognition and is not associated with common side effects of currently approved treatments, including no meaningful weight gain, extrapyramidal symptoms, increased prolactin levels, akathisia and/or sedation.

Given this differentiated profile, KarXT has meaningful and expanding revenue potential in schizophrenia and with upside in additional indications and geographies:

  1. Schizophrenia: KarXT is expected to launch in late 2024 in the U.S. as a treatment for schizophrenia in adults. There are approximately 1.6 million1 people treated for schizophrenia in the U.S., a significant portion of whom do not respond to currently available therapies and experience unacceptable side effects.
  2. 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.
  3. Alzheimer’s disease psychosis: Registrational clinical trials are currently underway evaluating KarXT for the treatment of Alzheimer’s disease psychosis, with data expected in 2026. There are more than 6 million2 people living with Alzheimer’s disease in the U.S. There are currently no approved treatments for Alzheimer’s disease psychosis.
  4. Additional indications: Bristol Myers Squibb believes KarXT also has potential in additional indications, including Bipolar I disorder, which impacts approximately 1.4 million1 people in the U.S., and Alzheimer’s disease agitation.

Under the terms of the merger agreement, BMS will acquire all outstanding shares of Karuna common stock for $330.00 per share in cash representing an approximately 53.4% premium to Karuna Therapeutic’s closing stock price on December 21, 2023, for a total equity value of approximately $14.0 billion, or $12.7 billion net of estimated cash acquired.

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.

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