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Karuna (KRTX) Up 48% on $14B Buyout Offer From Bristol Myers
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Karuna Therapeutics signed a definitive merger agreement with Bristol Myers Squibb (BMY - Free Report) . Per the agreement terms, Bristol Myers will acquire all outstanding shares of Karuna for $330 per share in cash, aggregating to $14.0 billion.
A clinical-stage biopharmaceutical company, Karuna is focused on developing new therapies for treating psychiatric and neurological conditions. Its lead asset, KarXT (xanomeline-trospium), is an antipsychotic with a novel mechanism of action and differentiated efficacy and safety. The new drug application for KarXT for treating schizophrenia in adults is under review in the United States. The FDA has set a target action date of Sep 26, 2024.
If approved, KarXT will provide a new treatment option for patients and be the first novel pharmacological approach for schizophrenia treatment in several decades. A commercial launch is expected before 2024-end.
KarXT is also being evaluated in separate registrational late-stage studies as adjunctive therapy to the existing standard-of-care agents in schizophrenia and for treating psychosis in patients with Alzheimer’s disease (AD).
Based on the novel approach utilized by KarXT, Bristol Myers believes that the drug also has the potential to treat additional neurological indications like bipolar I disorder and agitation associated with AD indication.
The transaction, expected to be completed by first-half 2024, is subject to customary closing conditions and clearance from regulatory authorities. Karuna’s and Bristol Myers’ board of directors have already approved this transaction.
Following this news announcement, Karuna’s shares surged 47.7% on Dec 22. Year to date, the stock has rallied 61.8% against the industry’s 16.1% fall.
Image Source: Zacks Investment Research
Karuna currently lacks a steady revenue stream due to a lack of approved drugs. The company is dependent on its pipeline candidates for growth. An acquisition by a big pharma giant like Bristol Myers, which has high reserves of cash flow, would enable the company to ramp up the development of its pipeline. Once the pipeline candidates are approved for marketing, Karuna will have access to Bristol Myers’ larger and well-established commercial supply chain and network distribution.
Bristol Myers expects that the acquisition will diversify its broad portfolio, enabling it to establish a presence in the schizophrenia space, which has enormous potential given the lack of treatments. It intends to finance this deal primarily using debt.
This is the second major acquisition deal by a pharma giant to strengthen its neuroscience portfolio in this month. Earlier in December, AbbVie (ABBV - Free Report) signed a definitive agreement to acquire neuroscience drugmaker Cerevel Therapeutics (CERE - Free Report) for $8.7 billion. Through this acquisition, AbbVie intends to strengthen its neuroscience pipeline by adding Cerevel’s novel pipeline candidates being studied across a range of psychiatric and neurological disorders, including schizophrenia, Parkinson's disease and mood disorders.
The AbbVie/Cerevel transaction is expected to close in mid-2024, subject to shareholder and regulatory approval. These companies’ boards of directors have approved the transaction.
Image: Bigstock
Karuna (KRTX) Up 48% on $14B Buyout Offer From Bristol Myers
Karuna Therapeutics signed a definitive merger agreement with Bristol Myers Squibb (BMY - Free Report) . Per the agreement terms, Bristol Myers will acquire all outstanding shares of Karuna for $330 per share in cash, aggregating to $14.0 billion.
A clinical-stage biopharmaceutical company, Karuna is focused on developing new therapies for treating psychiatric and neurological conditions. Its lead asset, KarXT (xanomeline-trospium), is an antipsychotic with a novel mechanism of action and differentiated efficacy and safety. The new drug application for KarXT for treating schizophrenia in adults is under review in the United States. The FDA has set a target action date of Sep 26, 2024.
If approved, KarXT will provide a new treatment option for patients and be the first novel pharmacological approach for schizophrenia treatment in several decades. A commercial launch is expected before 2024-end.
KarXT is also being evaluated in separate registrational late-stage studies as adjunctive therapy to the existing standard-of-care agents in schizophrenia and for treating psychosis in patients with Alzheimer’s disease (AD).
Based on the novel approach utilized by KarXT, Bristol Myers believes that the drug also has the potential to treat additional neurological indications like bipolar I disorder and agitation associated with AD indication.
The transaction, expected to be completed by first-half 2024, is subject to customary closing conditions and clearance from regulatory authorities. Karuna’s and Bristol Myers’ board of directors have already approved this transaction.
Following this news announcement, Karuna’s shares surged 47.7% on Dec 22. Year to date, the stock has rallied 61.8% against the industry’s 16.1% fall.
Image Source: Zacks Investment Research
Karuna currently lacks a steady revenue stream due to a lack of approved drugs. The company is dependent on its pipeline candidates for growth. An acquisition by a big pharma giant like Bristol Myers, which has high reserves of cash flow, would enable the company to ramp up the development of its pipeline. Once the pipeline candidates are approved for marketing, Karuna will have access to Bristol Myers’ larger and well-established commercial supply chain and network distribution.
Bristol Myers expects that the acquisition will diversify its broad portfolio, enabling it to establish a presence in the schizophrenia space, which has enormous potential given the lack of treatments. It intends to finance this deal primarily using debt.
This is the second major acquisition deal by a pharma giant to strengthen its neuroscience portfolio in this month. Earlier in December, AbbVie (ABBV - Free Report) signed a definitive agreement to acquire neuroscience drugmaker Cerevel Therapeutics (CERE - Free Report) for $8.7 billion. Through this acquisition, AbbVie intends to strengthen its neuroscience pipeline by adding Cerevel’s novel pipeline candidates being studied across a range of psychiatric and neurological disorders, including schizophrenia, Parkinson's disease and mood disorders.
The AbbVie/Cerevel transaction is expected to close in mid-2024, subject to shareholder and regulatory approval. These companies’ boards of directors have approved the transaction.
Karuna Therapeutics, Inc. Price
Karuna Therapeutics, Inc. price | Karuna Therapeutics, Inc. Quote
Zacks Rank
Karuna currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.