Bristol Myers to buy schizophrenia drugmaker Karuna Therapeutics for US$14 billion

BRISTOL Myers Squib on Friday (Dec 22) agreed to buy Karuna Therapeutics for US$14 billion in cash, gaining a promising experimental schizophrenia drug to power growth as patents on its older therapies expire.

Under the terms of the deal, Bristol would pay US$330 a share in cash for Karuna, which represents a 53.4 per cent premium to its last closing price.

The acquisition comes roughly two months after Bristol’s deal to buy cancer drugmaker Mirati Therapeutics for as much as US$5.8 billion.

New York-based Bristol has been under pressure to expand its drug pipeline due to declining demand for two of its top drugs, blood cancer treatment Revlimid and blood thinner Eliquis, which face generic competition.

“We expect KarXT to enhance our growth through the late 2020s and into the next decade,” Bristol Myers CEO Christopher Boerner said in a statement.

Analysts have forecast multi-billion dollars in sales of the drug, called KarXT. A decision on its use in adults is due by September next year, and the company is also testing it to treat patients with psychosis tied to Alzheimer’s disease.

While there are several drugs for schizophrenia, KarXT belongs to a new class of drug that are likely to cause lesser side effects like weight gain.

Karuna’s shares were trading up at US$314.01, while Bristol Myers shares fell 3 per cent before the bell as it expects to finance the deal mainly through new debt.

The deal is expected to hit Bristol’s earnings per share by roughly 30 US cents in 2024 due to financing costs.

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Other purchases by the drugmaker this year include its drug development deal with Sichuan Biokin Pharmaceutical for one of the Chinese drugmaker’s cancer treatments outside China, and its US$180 million deal for private drugmaker Orum. REUTERS