Biotech
Thursday, December 28th, 2023 12:08 am EDT
Key Points
- Acquisition Agreement: Bristol Myers Squibb has entered into a definitive agreement to acquire Karuna Therapeutics, a biopharmaceutical company, for a substantial amount of $14 billion in cash. The acquisition is structured at a rate of $330 per share, emphasizing the strategic significance and value attributed to Karuna’s assets and expertise in the pharmaceutical industry.
- Market Impact and Financial Performance: Following the announcement of the acquisition, there was a notable impact on the stock prices of both companies. Karuna’s stock surged over 47%, closing at $317.85 per share on the day of the news. In comparison, Bristol Myers Squibb’s shares experienced a 2% increase. The market response underscores the perceived value and positive anticipation surrounding the acquisition.
- Strategic Rationale and Drug Pipeline Expansion: The acquisition is positioned as a strategic move by Bristol Myers Squibb to enhance its drug pipeline. This strategic decision comes in the wake of reduced demand for the company’s blood cancer drug Revlimid, attributed to competition from a generic alternative in the third quarter. By acquiring Karuna, which specializes in developing medications for neurological and psychiatric conditions, Bristol Myers Squibb aims to diversify and expand its portfolio, particularly in the field of neuroscience. The lead asset of Karuna, an antipsychotic named KarXT, is anticipated to serve as a treatment for adults with schizophrenia starting in late 2024. The acquisition is expected to fuel growth for Bristol Myers Squibb not only in the late 2020s but also into the next decade.
Bristol Myers Squibb has entered into a definitive agreement to acquire Karuna Therapeutics, a biopharmaceutical company, for $14 billion in cash, translating to $330 per share. Following this announcement, Karuna’s stock surged over 47% to $317.85 per share, while Bristol Myers Squibb’s shares experienced a 2% increase.
The acquisition is strategically significant for Bristol Myers Squibb as it aims to bolster its drug pipeline, particularly in the realm of neuroscience, after facing challenges in demand for its blood cancer drug Revlimid due to competition from a generic alternative in the third quarter.
Both the boards of directors at Bristol Myers and Karuna unanimously approved the acquisition, and the deal is anticipated to conclude in the first half of 2024.
Karuna Therapeutics specializes in developing medications for individuals with neurological and psychiatric conditions. Its leading asset is an antipsychotic called KarXT, projected to be a treatment for adults with schizophrenia starting in late 2024. The acquisition aligns with Bristol Myers Squibb’s strategic goals, especially in the field of neuroscience, offering growth opportunities through the late 2020s and into the next decade, according to Bristol Myers Squibb CEO Christopher Boerner.
KarXT is not limited to schizophrenia treatment; it is also being assessed as a potential remedy for Alzheimer’s disease psychosis and a specific type of bipolar disorder, expanding its potential applications in mental health therapeutics.
The acquisition underscores the opportunities and advancements in neuroscience, with Bristol Myers Squibb leveraging Karuna’s portfolio to reach individuals grappling with schizophrenia and Alzheimer’s disease psychosis. Karuna CEO Bill Meury emphasized the synergy between Karuna’s innovative treatment approaches and Bristol Myers Squibb’s global expertise in drug development and commercialization.
Citi and Gordon Dyal & Co. advised Bristol Myers Squibb on the acquisition, while Goldman Sachs served as the exclusive advisor for Karuna. The collaboration is poised to strengthen Bristol Myers Squibb’s position in the neuroscience sector, providing novel treatment options and paving the way for sustained growth in the pharmaceutical landscape.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/22/bristol-myers-squibb-to-buy-karuna-therapeutics.html
