Merger Agreement Reached Between Bristol Myers Squibb and Karuna
NEW YORK — In a significant move within the pharmaceutical industry, drugmaker Bristol Myers Squibb has announced its acquisition of Karuna Therapeutics, a biopharmaceutical company known for its development of a groundbreaking antipsychotic. The deal, valued at $14 billion, was confirmed by both companies on Friday.
Premium Offered at 53% Over Karuna’s Thursday Stock Price
The merger agreement includes a cash transaction amounting to $330 per share, representing a premium of 53% over Karuna’s stock price on Thursday. This substantial offer garnered unanimous approval from the boards of directors of both Bristol Myers Squibb and Karuna.
KarXT: A Valuable Asset with Promising Potential
Karuna’s most valuable asset, KarXT, is an experimental antipsychotic with a novel mechanism that has shown promise. Currently under review by the U.S. Food and Drug Administration for the treatment of schizophrenia in adults, KarXT is also undergoing trials related to Alzheimer’s disease psychosis.
Enhancing Growth and Strengthening Neuroscience Portfolio
Bristol Myers Squibb’s CEO, Christopher Boerner, expressed his expectation that KarXT would enhance the company’s growth throughout the late 2020s and into the next decade. Boerner emphasized the strengthening of Bristol Myers Squibb’s neuroscience portfolio with the acquisition.
Achieving a Wider Reach in Mental Health Treatment
Bill Meury, president and CEO of Karuna, highlighted Bristol Myers Squibb’s prominent position in the industry and the potential for KarXT and other assets to reach a wider audience of individuals living with schizophrenia and Alzheimer’s disease psychosis through the merger.
Analysts Bullish on KarXT’s Prospects
Analysts have expressed optimism regarding KarXT’s prospects. Graig Suvannavejh, senior U.S. healthcare equity research analyst at Mizuho Securities, issued a research note on Friday stating that unadjusted sales could reach $6.8 billion in peak years if the drug receives market approval for multiple uses.
Pharmaceutical Industry Trends and Other Major Acquisitions
Shares of Bristol Myers Squibb rose approximately 2% in afternoon trading on Friday. However, the company’s stock has experienced a decline of over 27% year-to-date, aligning with trends observed among other large drugmakers in 2023.
The completion of the Karuna transaction is anticipated in the first half of 2024, subject to regulatory approvals and other closing conditions.
This acquisition between Bristol Myers Squibb and Karuna is part of a larger pattern in the pharmaceutical industry. Other notable acquisitions this year include Pfizer’s $43 billion purchase of Seagen in March to expand its reach in cancer treatments, and AbbVie’s approximately $10 billion investment in ImmunoGen last month to strengthen its cancer-fighting treatment portfolio.
In October, Bristol Myers Squibb also acquired Mirati Therapeutics for an equity value of $4.8 billion.