Karuna Therapeutics surges 47% after Bristol Myers Squibb announces $14 billion deal

In a strategic move, Bristol Myers Squibb has announced its acquisition of biopharmaceutical company Karuna Therapeutics for a substantial $14 billion in cash, equivalent to $330 per share. This development resulted in a notable surge of over 47% in Karuna’s stock, closing at $317.85 per share, while Bristol Myers Squibb shares experienced a 2% increase.

This acquisition is viewed as a pivotal step for Bristol Myers Squibb to bolster its drug pipeline, particularly in response to a decline in demand for its blood cancer drug, Revlimid, during the third quarter, attributed to increased competition from generic offerings.

The unanimous approval from the boards of directors at both Bristol Myers and Karuna signals a comprehensive consensus on the deal, expected to be finalized in the first half of 2024, according to an official release. Karuna Therapeutics specializes in the development of medications for individuals dealing with neurological and psychiatric conditions. Its flagship product, an antipsychotic named KarXT, is anticipated to be available as a treatment for adults with schizophrenia starting in late 2024.

Bristol Myers Squibb’s CEO, Christopher Boerner, expressed enthusiasm about the acquisition, stating, “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.”

KarXT is not limited to schizophrenia treatment; it is also being explored as a potential therapy for Alzheimer’s disease psychosis and a specific form of bipolar disorder, expanding its potential impact across diverse neurological conditions.

Karuna’s CEO, Bill Meury, emphasized the significant advancements offered by the company’s portfolio, stating, “With Bristol Myers Squibb’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.”

The deal was advised by Citi and Gordon Dyal & Co. for Bristol Myers, with Goldman Sachs serving as the exclusive advisor for Karuna. The collaboration is poised to position Bristol Myers Squibb at the forefront of innovation and growth in the neuroscience space, addressing the evolving needs of patients dealing with various neurological and psychiatric disorders.