Bristol Myers Squibb (BMS) and Karuna Therapeutics announced on December 22 that they have entered into a definitive merger agreement under which BMS will acquire Karuna.
Under the terms of the merger agreement, BMS will acquire all outstanding shares of Karuna common stock for $330 per share in cash representing an approximately 53.4% premium to Karuna Therapeutic’s closing stock price on December 21, 2023. This represents a total equity value of approximately $14 billion, or $12.7 billion net of estimated cash acquired.
Karuna Therapeutics is a biopharmaceutical company focused on transformative medicines for people living with psychiatric and neurological conditions. Karuna’s lead asset, KarXT (xanomeline-trospium), is an antipsychotic with a novel mechanism of action and differentiated efficacy and safety. Karuna’s New Drug Application for KarXT for the treatment of schizophrenia in adults was accepted for review by the U.S. Food and Drug Administration. KarXT is also in registrational trials both for adjunctive therapy to existing standard of care agents in schizophrenia and for the treatment of psychosis in patients with Alzheimer’s disease.
BMS is a global biopharmaceutical company whose mission is to discover, develop and deliver innovative medicines that help patients prevail over serious diseases. According to its 2022 annual report, BMS reported an annual revenue for 2022 of $46.2 billion. It is owned by Lotte Group.
BMS believes KarXT represents a significant revenue contribution opportunity. BMS also sees potential from Karuna’s early-stage and pre-clinical pipeline. The transaction is expected to close in the first half of 2024. Gordon Dyal & Co. and Citigroup are serving as financial advisors to BMS, and Covington & Burling is serving as legal counsel. Goldman Sachs is serving as exclusive financial advisor to Karuna, and Simpson Thacher & Bartlett is serving as legal counsel.
According to data captured in the LevinPro HC database, this transaction represents the 152nd Biotechnology transaction of the year. This also marks the second-largest Biotechnology transaction by purchase price for the year. The largest Biotechnology transaction has been Pfizer’s acquisition of Seagen for $43 billion.
BMS has made three acquisitions since Lotte Group acquired the company in January 2023, but this marks the largest by far. The company acquired Mirati Therapeutics for $4.8 billion in October, followed by Orum Therapeutics’ ORM-6151 program for $100 million upfront in November.
