Bristol Myers Squibb (BMS) has announced the completion of its acquisition of Karuna Therapeutics, Inc., marking a significant expansion of BMS’s neuroscience portfolio. With this acquisition, Karuna has ceased trading on the Nasdaq Global Select Market and is now a fully integrated subsidiary of BMS. This move consolidates BMS’s position in neuroscience and underscores its commitment to delivering innovative treatments to patients.
Karuna’s lead product, KarXT (xanomeline-trospium), represents a potentially groundbreaking treatment for schizophrenia in adults, offering a novel mechanism of action distinguished by its efficacy and safety profile. KarXT is under review with a Prescription Drug User Fee Act (PDUFA) date set for September 26, 2024. Moreover, the drug is currently undergoing registrational trials for use as an adjunctive therapy in schizophrenia and for treating psychosis in Alzheimer’s disease patients. It also holds potential for treating other conditions, including Bipolar I disorder and Alzheimer’s disease agitation.
The financial aspects of the acquisition reflect BMS’s strategic planning and robust financial health. Although the transaction is expected to result in a one-time, non-deductible charge of approximately $12 billion for Acquired In-Process Research and Development (Acquired IPR&D), impacting both 2024’s first quarter and full-year GAAP and non-GAAP EPS, BMS anticipates mitigating these costs through disciplined resource allocation, cost efficiencies, and portfolio prioritization. The acquisition is projected to dilute BMS’s non-GAAP diluted earnings per share by around $0.30 in 2024, mainly due to financing costs associated with new debt issuance.
BMS is committed to leveraging its strong financial profile to continue investing in growth, maintain investment-grade solid credit ratings, and provide shareholder returns through dividends and share repurchases. The company has engaged Gordon Dyal & Co. and Citi as financial advisors and Covington & Burling LLP as legal counsel for the transaction. Karuna utilized the expertise of Goldman Sachs & Co. LLC as its exclusive financial advisor and Simpson Thacher & Bartlett LLP as legal counsel.
BMS plans to provide an updated financial outlook, including the impacts of this transaction, when it reports its first-quarter 2024 results on April 25, 2024. This aligns with its practice of updating its financial outlook quarterly.
Jon Napitupulu is Director of Media Relations at The Clinical Trial Vanguard. Jon, a computer data scientist, focuses on the latest clinical trial industry news and trends.
