New York-based Bristol has been under pressure to expand its drug pipeline amid declining demand for two of its top drugs, blood cancer treatment Revlimid and blood thinner Eliquis, which face generic competition.
“We expect KarXT to enhance our growth through the late 2020s and into the next decade,” CEO Christopher Boerner said in a statement.
The drugmaker is also expected to face revenue losses for two of its other top sellers, cancer immunotherapy Opdivo and blood thinner Eliquis, as they lose patent protection later this decade.
Eliquis is also among the ten drugs expected to be subject to drug price negotiations by the U.S. Medicare health program in 2026.
Under the terms of the deal, Bristol would pay $330 a share in cash for Karuna, which represents a 53.4% premium to its last closing price. Karuna’s shares rose to $317 in premarket trading.
Bristol shares fell 3% before the bell as it expects to finance the deal mainly through new debt. Its shares have so far this year lost 30% of their value.
The deal is expected to hit the company’s earnings per share by roughly 30 cents in 2024 due to the financing costs.
The acquisition comes roughly two months after Bristol’s deal to buy cancer drugmaker Mirati Therapeutics (NASDAQ:MRTX) for as much as $5.8 billion.
Analysts have forecast multi-billion dollars in sales of the drug, called KarXT. A decision on its use in adults is due by September next year, and the company is also testing it to treat patients with psychosis tied to Alzheimer’s disease.
While there are several drugs for schizophrenia, KarXT belongs to a new class of drug that are likely to cause lesser side effects like weight gain.
The deal highlights growing interest in neuroscience treatments, which has seen a spurt in research in recent years. AbbVie (NYSE:ABBV) earlier this month agreed to buy Karuna’s rival Cerevel Therapeutics for $8.7 billion.
“Our gut here is that this process was somewhat competitive and the acquisition price seems to reflect this. There shouldn’t be any FTC (antitrust) issues,” said Stifel analyst Paul Matteis in a note to clients.
Gordon Dyal & Co and Citi were the financial advisers to Bristol, while Goldman Sachs was the exclusive financial advisor to Karuna.
Source: Economy - investing.com
