Bristol Myers new CEO grabs M&A by the horns

Karuna Therapeutics

22/12/2023 16:15

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)
    By Robert Cyran
       NEW YORK, Dec 22 (Reuters Breakingviews) - Buying rival
drugmaker Karuna for $14 bln is a big risk for just-installed
Chris Boerner. Karuna’s schizophrenia therapy could see giant
sales, but with much uncertainty and suboptimal patent
protection. Pharma has shone in a dismal year for mergers. Even
so, it’s a daring deal.    
    Full view will be published shortly.
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    CONTEXT NEWS 
Bristol Myers Squibb said on Dec. 22 it had agreed to buy Karuna
Therapeutics for $14 billion, or $330 per share. That is a 53%
premium to where stock in the biotechnology company closed on
Dec. 21.
    Karuna’s lead drug, an antipsychotic for use in
schizophrenia called KarXT, is up for U.S. Food and Drug
Administration approval next year. The drug belongs to a new
class of drugs, which promise greater efficacy and fewer side
effects which can cause patients to discontinue existing
therapies. The drug is also being tested in Alzheimer’s disease
and the buyer said it thinks KarXT may be useful in treating
bipolar disorder.
    Bristol Myers says it expects to fund the purchase price,
which is $12.7 billion after deducting the net cash on Karuna’s
balance sheet, with new debt.

 (Editing by John Foley and Aditya Sriwatsav)
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