Bristol Myers Squibb (BMS) has announced a major acquisition, revealing its agreement to purchase Karuna Therapeutics, a prominent biopharmaceutical company, for a substantial $14 billion in an all-cash transaction, equating to $330 per share.
The news of this acquisition caused Karuna’s stock to surge by over 47%, reaching an impressive $317.85 per share, while BMS shares experienced a more modest 2% increase.
This strategic move by Bristol Myers Squibb is aimed at bolstering its drug pipeline, particularly in response to the competition posed by generic alternatives, which led to a decline in demand for its blood cancer drug, Revlimid, during the third quarter.
The acquisition has received unanimous approval from the boards of directors at both Bristol Myers and Karuna.
The transaction is expected to be finalized during the first half of 2024, as stated in a company release.
Karuna Therapeutics specializes in developing medications for individuals grappling with neurological and psychiatric disorders.
Its flagship asset, an antipsychotic drug known as KarXT, is slated to serve as a treatment option for adults suffering from schizophrenia, with plans for its release set for late 2024.
Bristol Myers Squibb’s CEO, Christopher Boerner, expressed his optimism about the acquisition, noting, “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.”
Furthermore, KarXT is being explored as a potential remedy for Alzheimer’s disease psychosis and a specific form of bipolar disorder, reflecting its potential to address critical unmet medical needs.
Karuna’s CEO, Bill Meury, highlighted the significance of this collaboration, emphasizing that their portfolio “offers advancements in treatment not seen in many years.”
The transaction was advised by Citi and Gordon Dyal & Co. on behalf of Bristol Myers Squibb, while Goldman Sachs played an exclusive advisory role for Karuna, underscoring the complexity and strategic importance of the deal for both parties.
This acquisition reflects BMS’s commitment to diversifying its portfolio and addressing the pressing medical needs in the field of neuroscience.