Karuna Therapeutics (KRTX) -) shares soared higher Friday after the neurological-drug specialists agreed to a $14 billion takeover by pharma giant Bristol Myers Squibb (BMY) -).
Bristol Myers said it would pay $330 a share cash for the Boston drugmaker, a 53% premium to its Thursday closing price, a deal that values the group at around $14 billion.
Karuna focuses on treatments for patients suffering psychiatric and neurological conditions. Last month the Food and Drug Administration accepted its new-drug application for KarXT, a drug designed to treat schizophrenia.
“Schizophrenia and Alzheimer’s disease psychosis affect millions of people worldwide, with limited to no treatment options," said Karuna's chief medical officer, Samit Hirawat. "KarXT’s novel mechanism has resulted in a transformational profile in schizophrenia, with compelling efficacy and a differentiated safety profile.”
“KarXT also has the potential to deliver meaningful benefits to patients as an adjunctive treatment for patients with schizophrenia and as a first treatment for Alzheimer’s disease psychosis,” he added.
Karuna Therapeutics shares were marked 47% higher in early Friday trading immediately following news of the takeover to change hands at $316.12
Bristol Myers shares, meanwhile, gained 2.56% to trade at $52.57 each, trimming the stock's six-month decline to around 19.5%.
Bristol Myers: Second major deal of '23
“Our experts are excited about KarXT, a first-in-class (drug) for the treatment of Schizophrenia and Alzheimer’s disease psychosis, for many reasons," said Third Bridge's global sector lead for healthcare Lee Brown.
"First, KarXT has proven efficacy with early and sustained significant reduction of symptoms as demonstrated in the phase 3 EMERGENT trial, which served as the drug’s third positive trial," he said. "Second, it’s novel mechanism of action is truly differentiated as all other approved pharmacological treatments share a common functionality as dopamine type-2 receptor antagonists, whereas KarXT uniquely and selectively activates muscarinic receptors in the brain.”
The deal marks the second major acquisition for Bristol Myers this year, following its $5.8 billion purchase of San Diego cancer-drug specialists Mirati Therapeutics (MRTX) -) in October.
“There are tremendous opportunities in neuroscience, and Karuna strengthens our position and accelerates the expansion and diversification of our portfolio in the space," said Bristol Myers CEO Chris Boerner. "We expect KarXT to enhance our growth through the late 2020s and into the next decade."
“This transaction fits squarely within our business development priorities of pursuing assets that are strategically aligned, scientifically sound, financially attractive, and have the potential to address areas of significant unmet medical need," he added.
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