BMS Strikes $14 Billion Deal for Karuna Therapeutics Amid Global Race for Breakthrough Schizophrenia Drug KarXT; Chinese Biopharma Zai Lab Holds Greater China Rights

Source: The Lancet

On Friday (December 22), Karuna Therapeutics, a U.S. biopharmaceutical company listed on Nasdaq, closed up 47% at $317.85 per share, refreshing the all-time high set in August last year. The company's market value reached $11.99 billion.

Earlier today, before the market opened, Bristol-Myers Squibb (BMS), a long-established multinational biopharmaceutical giant, and Karuna Therapeutics announced that the two companies have entered into a definitive merger agreement. BMS has agreed to acquire Karuna at a price of $330 per share, with the total transaction valued at $14 billion. The deal is expected to be completed in the first half of next year.

It is worth noting that, compared to Karuna Therapeutics' closing price of $215.19 on Thursday, the acquisition price announced by Bristol-Myers Squibb (BMS) is 53% higher, and even about 4% higher than Friday's closing price after the surge. On the same day, BMS's stock price also rose by 2%, with its latest market value reaching $106.39 billion.

The main reason Bristol-Myers Squibb is willing to acquire at such a high premium is Karuna Therapeutics' potential "first-in-class" therapy, "KarXT" (xanomeline-trospium).

According to reports, KarXT is an oral, investigational M1/M4 preferred muscarinic agonist for the treatment of mental and neurological disorders, including psychotic symptoms in schizophrenia and Alzheimer's disease.

KarXT is currently the first potential drug with this truly novel and unique dual mechanism, which does not rely on dopaminergic or serotonergic pathways to treat symptoms of severe mental illnesses. Instead, it leverages the therapeutic potential of xanomeline while managing disease-related side effects through trospium.

A month ago, Karuna Therapeutics announced that the U.S. Food and Drug Administration (FDA) had accepted the New Drug Application (NDA) for KarXT. The Prescription Drug User Fee Act (PDUFA) date for the application is September 26, 2024. If approved, KarXT will become the first treatment for schizophrenia with a new pharmacological mechanism in decades.

Last week, The Lancet, an internationally authoritative comprehensive medical weekly, published an article on the phase III clinical trial "EMERGENT-2" data of KarXT. The conclusion of the article stated that KarXT can effectively reduce positive and negative symptoms in patients with schizophrenia and is generally well-tolerated.

In addition, Phase III trials assessing KarXT as an adjunctive treatment for schizophrenia and for the treatment of Alzheimer's disease-related psychiatric disorders are also underway. BMS believes that KarXT will become a significant component of the company’s future revenue and also sees potential in Karuna’s other pipeline products.

Notably, as early as November 2021, Zai Lab entered into an exclusive licensing agreement with Karuna Therapeutics, granting Zai Lab the rights to develop, manufacture, and commercialize KarXT in Greater China.

It is reported that Zai Lab is currently accelerating the bridging clinical trials and marketing approval of KarXT in China, with multiple indications already in the registrational study phase.

Editor: Zhou Wei