Bristol-Myers' Acquisition Of Karuna Therapeutics Paves Way For Aggressive Global Marketing Of KarXT: Analyst

H.C. Wainwright analyst Raghuram Selvaraju downgraded Karuna Therapeutics, Inc. KRTX to Neutral from Buy, raising the Price Target to $330 from $300.

Bristol-Myers Squibb Company BMY agreed to acquire Karuna Therapeutics for $330.00 per share in cash, for a total equity value of $14.0 billion, or $12.7 billion net of estimated cash acquired. 

Per the analyst, Bristol is an attractive acquirer for Karuna based on its longstanding track record of success in developing and commercializing neuroscience-focused drugs—particularly Abilify (aripiprazole).

The transaction is slated to close in 1H24, ahead of the U.S. approval decision on Karuna's lead candidate KarXT.

The fact that Abilify was the cornerstone of Bristol's neuropsychiatry portfolio—sold to treat schizophrenia, bipolar disorder, and related conditions—underscores the potential for Bristol to expertly and aggressively market KarXT in both the U.S. and other territories. 

Eli Lilly And Company LLY would be eligible to receive milestone payments and royalties on net sales of KarXT given its discovery and development of xanomeline, one of the two components of Karuna's drug.

 In late September, Karuna completed the submission of its New Drug Application (NDA) filing to the FDA for approval of KarXT, which is slated for U.S. approval decision next year. 

Per Selvaraju, the drug's clinical profile should justify relatively rapid market adoption and enthusiastic receptivity among prescribing physicians. 

The analyst points in particular to KarXT's applicability as adjunctive therapy and its combinability with existing approved agents. 

The analyst expects the company to report an FY23 loss of $(12.08) per share and an FY24 loss of $(13.16) per share.

Read Next: With Karuna Therapeutics $14B Deal, Bristol Myers Is Serious For Re-Establishing Its Neurology Portfolio: Analyst

Price Action: KRTX shares are trading lower by 0.15% to $317.37 on the last check Tuesday.