Bristol Myers Squibb acquires Karuna Therapeutics for $14 billion, boosting neuroscience portfolio

Bristol Myers Squibb is buying Karuna Therapeutics, a biopharmaceutical company developing a new antipsychotic, for $14 billion.

On Friday, Bristol Myers Squibb and Karuna announced their merger. The cash transaction of $330 per share offers a 53% premium over Karuna's stock on Thursday. Directors of both companies unanimously approved the deal.

Its best asset is KarXT, an experimental antipsychotic with a promising new mechanism. KarXT is being reviewed by the FDA for treating adult schizophrenia. The drug is also being tested for Alzheimer's psychosis.

Bristol Myers Squibb CEO Christopher Boerner said in a prepared statement that the Karuna acquisition strengthens the company's neuroscience portfolio and will boost growth through the late 2020s and into the next decade. Eliquis, a blood clot preventer, is Bristol's best seller.

Karuna president and CEO Bill Meury said KarXT and other assets “will be well-positioned to reach those living with schizophrenia and Alzheimer's disease psychosis” after the merger due to Bristol Myers Squibb's industry dominance.

Analysts like KarXT too. If the drug has multiple uses, Mizuho Securities senior U.S. healthcare equity research analyst Graig Suvannavejh predicted $6.8 billion in peak year unadjusted sales on Friday.

Bristol Myers Squibb bought Mirati Therapeutics for $4.8 billion in equity in October.