Bristol Myers Squibb (BMS) has signed a definitive agreement for the acquisition of all outstanding shares of common stock of biopharmaceutical company Karuna Therapeutics for an equity value totalling $14bn in cash.

The new strategic merger deal is part of BMS’ strategy to bolster its neuroscience portfolio. 

Karuna focuses on the discovery and development of therapies for psychiatric and neurological ailments. 

Through the transaction, BMS will gain access to Karuna’s lead asset KarXT (xanomeline-trospium). 

It is a potential antipsychotic therapy for patients with schizophrenia and Alzheimer’s disease psychosis.

KarXT possesses a new mechanism of action with varied distinguished efficacy and safety profiles. 

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The US Food and Drug Administration (FDA) recently has accepted Karuna’s new drug application (NDA) for KarXT to treat adult patients with an approval decision anticipated on 26 September next year under the Prescription Drug User Fee Act (PDUFA).

The antipsychotic is currently being analysed in registrational clinical trials as adjunctive therapy to present standard-of-care treatments for schizophrenia and psychosis associated with Alzheimer’s disease.

Apart from these indications, BMS envisages the potential of KarXT in further ailments, including Bipolar I disorder.

Bristol Myers Squibb CEO Christopher Boerner said: “There are tremendous opportunities in neuroscience, and Karuna strengthens our position and accelerates the expansion and diversification of our portfolio in the space. 

“We expect KarXT to enhance our growth through the late 2020s and into the next decade. 

“This transaction fits squarely within our business development priorities of pursuing assets that are strategically aligned, scientifically sound, financially attractive, and have the potential to address areas of significant unmet medical need.”

The agreement received unanimous approval from the boards of directors of BMS and Karuna.

Subject to necessary closing conditions and approvals, the deal is anticipated to conclude in the first half of next year.

Karuna Therapeutics president and CEO Bill Meury said: “Karuna’s portfolio offers advancements in treatment not seen in many years. 

“With Bristol Myers Squibb’s long-standing expertise in developing and commercializing medicines on a global scale and legacy in neuroscience, KarXT and the other assets in our pipeline will be well-positioned to reach those living with schizophrenia and Alzheimer’s disease psychosis.”

The latest development comes after BMS received US FDA approval for Augtyro (repotrectinib) to treat adults with non-small cell lung cancer.