Bristol Myers acquiring Karuna Therapeutics in $14B deal

Bristol Myers Squibb (BMY) is buying biopharmaceutical company Karuna Therapeutics (KRTX) for $330.00 per share, with the deal valued at $14 billion. Karuna has an experimental schizophrenia drug that is awaiting approval from the Food and Drug Administration. Yahoo Finance's Anjalee Khemlani explains why the Bristol Myers is making the deal.

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Video Transcript

BRAD SMITH: care also jumping on the acquisition train here, Bristol-Myers Squibb is reportedly reached a $14 billion deal to acquire Karuna Therapeutics, Therapeutics, usually I'm better at that one. According to the Wall Street Journal, the drug maker will pay $330 per share for Karuna, whose experimental drug for schizophrenia is awaiting FDA approval, the deal expected to close in the first half of 2024. Yahoo Finance's Anjalee Khemlani joins us now with more. Hey, Anj.

ANJALEE KHEMLANI: Hey, guys. Yes, that $14 billion deal makes it the second largest this year. We, of course, know that Pfizer's Icagen acquisition was about $43 billion, so that puts it in first place. This acquisition kind of puts neuroscience on the map, it's the second big deal that we've seen this year. Also, in that space, AbbVie acquiring Karuna's competitor, Cerevel, which is a little bit earlier in its process, doesn't have an application out for its drug just yet.

Meanwhile, Karuna looking to serve a market of about 1.6 million people with schizophrenia, and the drug, analysts say, could rake in about $6 billion. That drug is waiting for FDA approval by . 2024, the FDA is set to have a decision by September of next year, so after this deal likely closes in the early part of the year.

And this is a good move for Bristol-Myers, which has been really under pressure with its patent cliff that not different from any other large pharmaceutical companies that are also looking to boost their pipeline as they look for loss of patents for a number of their big, big drugs, some of their blockbusters. Bristol-Myers is also in that category. A lot of people not liking that deal earlier. Bristol was a little bit down on the news, because they're not liking the fact that it's going to add to the debt for the company. So that's a thing to look at.

But right now it's, an interesting time for [INAUDIBLE], lots of reinvestment after more than almost a dozen years, maybe a little bit more, since large pharma really backed off of this space. And now you can see that interest booming with, of course, that boom in mental health that we saw through the pandemic, so this is really spurring a lot more interest.

It certainly is. As we're watching the stock reaction you mentioned, some of the pressure that we saw on shares earlier, we'll see whether or not that holds through the open [INAUDIBLE]. Ang, thank you.