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On March 18, Bristol Myers Squibb said it completed its previously announced acquisition of Karuna Therapeutics Inc. – a Boston-based clinical-stage biotherapeutics company – in a deal worth approximately $14 billion. 

According to the Princeton-headquartered company, the move centers on KarXT, a potential first-in-class treatment for schizophrenia in adults. Karuna is a founded entity of PureTech Health, which invented KarXT. 

The U.S. Food and Drug Administration accepted Karuna’s New Drug Application (NDA) for KarXT in November 2023. The application has been granted a Prescription Drug User Fee Act date of Sept. 26, 2024. If approved, it “will represent the first new mechanism of action for patients with schizophrenia in over 50 years,” according to PureTech. 

“This acquisition recognizes the enormous potential of KarXT to help millions of people with schizophrenia in need of a new therapeutic option, and BMS will provide the global leadership to maximize the reach of KarXT,” PureTech Chief Innovation Officer Eric Elenko, and co-inventor of KarXT, said in a statement.  

According to Monday’s announcement, Karuna shares ceased trading on the Nasdaq Global Select Market and it is now a wholly owned subsidiary of BMS. 

“We are excited to expand our neuroscience portfolio as we welcome Karuna to Bristol Myers Squibb,” said BMS Chief Executive Officer Chris Boerner. “Importantly, this transaction aligns with our commitment to strengthening BMS’s growth profile in the latter half of the decade and beyond. We look forward to working with Karuna’s talented team to bring KarXT to patients with schizophrenia later this year.”

BMS added that KarXT also has the potential as a treatment of psychosis in patients with Alzheimer’s disease. 

Deal details

As previously disclosed, the transaction is expected to be dilutive to BMS’ non-GAAP diluted earnings per share by approximately $0.30 in 2024 from the financing cost of the transaction, which is primarily from a recently completed new debt issuance. The company said it expects to offset the operational expenses of the transaction through continued disciplined resource allocation, cost efficiencies and portfolio prioritization.

Gordon Dyal & Co. and Citi served as financial advisors to Bristol Myers Squibb; Covington & Burling LLP is serving as legal counsel. Goldman Sachs & Co. LLC served as exclusive financial advisor to Karuna, while Simpson Thacher & Bartlett LLP provided legal counsel. 

The transaction was first announced in December 2023, four days before it unveiled another acquisition: a $4.1 billion deal for San Diego-based RayzeBio Inc.