KarXT, Karuna’s Lead Asset, Is a Potential
First-in-Class Treatment for Schizophrenia with Multi-Billion
Dollar Sales Potential Across Multiple Indications
Bristol Myers Squibb (NYSE: BMY) today announced that it has
successfully completed its acquisition of Karuna Therapeutics, Inc.
(“Karuna”). With the acquisition's completion, Karuna shares have
ceased trading on the Nasdaq Global Select Market and Karuna is now
a wholly owned subsidiary of Bristol Myers Squibb (“BMS”).
“We are excited to expand our neuroscience portfolio as we
welcome Karuna to Bristol Myers Squibb,” said Chris Boerner, Ph.D.,
Chief Executive Officer, Bristol Myers Squibb. “Importantly, this
transaction aligns with our commitment to strengthening BMS’s
growth profile in the latter half of the decade and beyond. We look
forward to working with Karuna’s talented team to bring KarXT to
patients with schizophrenia later this year.”
Through this transaction, BMS has added KarXT
(xanomeline-trospium), an antipsychotic with a novel mechanism of
action and a differentiated efficacy and safety profile, and
Karuna’s early-stage and pre-clinical pipeline. KarXT has a
Prescription Drug User Fee Act (PDUFA) date of September 26, 2024
for the treatment of schizophrenia in adults. 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, with potential to
expand to additional indications, including Bipolar I disorder and
Alzheimer’s disease agitation.
As previously disclosed, the transaction is expected to be
dilutive to Bristol Myers Squibb’s non-GAAP diluted earnings per
share by approximately $0.30 in 2024 from the financing cost of the
transaction, which is primarily from a recently completed new debt
issuance. Bristol Myers Squibb expects to offset the operational
expenses of the transaction through continued disciplined resource
allocation, cost efficiencies and portfolio prioritization. Bristol
Myers Squibb’s cash flows and strong financial profile enable
continued commitment to strong investment-grade credit ratings and
investment for growth through business development opportunities
and distributions to shareholders through ongoing dividends and
share repurchases.
The transaction will be accounted for as an asset acquisition
resulting in an approximately $12 billion one-time, non-deductible
Acquired In-Process Research and Development (Acquired IPR&D)
charge impacting both 2024 first quarter and full-year GAAP and
non-GAAP EPS by approximately $5.93.
Consistent with past practice, Bristol Myers Squibb generally
provides updates to its financial outlook once each quarter. When
considering Bristol Myers Squibb’s financial outlook issued on
February 2, 2024, investors and analysts should take into account
the impacts outlined above. Bristol Myers Squibb will provide an
update to its financial outlook when it reports first quarter 2024
results on April 25, 2024.
Advisors
Gordon Dyal & Co. and Citi are serving as financial advisors
to Bristol Myers Squibb, and Covington & Burling LLP is serving
as legal counsel. Goldman Sachs & Co. LLC is serving as
exclusive financial advisor to Karuna, and Simpson Thacher &
Bartlett LLP is serving as legal counsel.
About Bristol Myers Squibb
Bristol Myers Squibb is a global biopharmaceutical company whose
mission is to discover, develop and deliver innovative medicines
that help patients prevail over serious diseases. For more
information about Bristol Myers Squibb, visit us at BMS.com or
follow us on LinkedIn, Twitter, YouTube, Facebook and
Instagram.
Cautionary Statement Regarding Forward-Looking
Statements
This communication contains “forward-looking statements”
regarding, among other things, the acquisition of Karuna by Bristol
Myers Squibb and Bristol Myers Squibb’s anticipated Acquired
IPR&D charges for the quarter ending March 31, 2024, and the
related impact to its GAAP and non-GAAP earnings per share. These
statements may be identified by the fact they use words such as
“should,” “could,” “expect,” “anticipate,” “estimate,” “target,”
“may,” “project,” “guidance,” “intend,” “plan,” “believe,” “will”
and other words and terms of similar meaning and expression in
connection with any discussion of future operating or financial
performance, although not all forward-looking statements contain
such terms. All statements that are not statements of historical
facts are, or may be deemed to be, forward-looking statements.
These statements are only predictions, and such forward-looking
statements are based on current expectations and involve inherent
risks and uncertainties, including factors that could delay, divert
or change any of them, and could cause actual outcomes and results
to differ materially from current expectations. No forward-looking
statement can be guaranteed. Actual results may differ materially
from current expectations because of numerous risks and
uncertainties including with respect to (i) the risk that the
expected benefits or synergies of the acquisition will not be
realized, including with respect to the potential commercialization
of KarXT, (ii) risks associated with legal proceedings instituted
related to the merger agreement (iii) unanticipated difficulties or
expenditures relating to the transaction, the response of business
partners and competitors to the consummation of the transaction
and/or potential difficulties in employee retention as a result of
the consummation of the transaction and (iv) completion of Bristol
Myers Squibb’s quarter-end closing process, including review by
management and the audit committee of the Bristol Myers Squibb’s
board of directors, which could result in changes to the
preliminary estimates described herein. Forward-looking statements
in this communication should be evaluated together with the many
uncertainties that affect Bristol Myers Squibb’s business,
particularly those identified in the cautionary factors discussion
in Bristol Myers Squibb’s Annual Report on Form 10-K for the year
ended December 31, 2023 and its subsequent Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K and other documents that
may be filed by Bristol Myers Squibb from time to time with the
U.S. Securities and Exchange Commission. Bristol Myers Squibb does
not undertake any obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
otherwise, except as required by law. The forward-looking
statements made in this communication relate only to events as of
the date on which the statements are made.
Use of Non-GAAP Financial Information
and Financial Guidance
In discussing financial guidance, Bristol Myers Squibb refers to
financial measures that are not in accordance with U.S. Generally
Accepted Accounting Principles (GAAP). The non-GAAP financial
measures are provided as supplemental information to the financial
measures presented in this press release that are calculated and
presented in accordance with GAAP and are presented because
management has evaluated the company’s financial results both
including and excluding the adjusted items or the effects of
foreign currency translation, as applicable, and believes that the
non-GAAP financial measures presented portray the results of the
company’s baseline performance, supplement or enhance management,
analysts and investors overall understanding of the company’s
underlying financial performance and trends and facilitate
comparisons among current, past and future periods.
Non-GAAP earnings and related EPS information are adjusted to
exclude certain costs, expenses, gains and losses and other
specified items that are evaluated on an individual basis after
considering their quantitative and qualitative aspects and
typically have one or more of the following characteristics, such
as being highly variable, difficult to project, unusual in nature,
significant to the results of a particular period or not indicative
of past or future operating results. These items are excluded from
non-GAAP earnings and related EPS information because Bristol Myers
Squibb believes they neither relate to the ordinary course of
Bristol Myers Squibb’s business nor reflect Bristol Myers Squibb’s
underlying business performance. Similar charges or gains were
recognized in prior periods and will likely recur in future
periods.
Because the non-GAAP financial measures are not calculated in
accordance with GAAP, they should not be considered superior to or
as a substitute for the related financial measures that are
prepared in accordance with GAAP and are not intended to be
considered in isolation and may not be the same as or comparable to
similarly titled measures presented by other companies due to
possible differences in method and in the items being adjusted. We
encourage investors to review our financial statements and
publicly-filed reports in their entirety and not to rely on any
single financial measure.
A reconciliation of forward-looking non-GAAP measures, including
non-GAAP EPS, to the most directly comparable GAAP measures is not
provided because comparable GAAP measures for such measures are not
reasonably accessible or reliable due to the inherent difficulty in
forecasting and quantifying measures that would be necessary for
such reconciliation. Namely, we are not without unreasonable
effort, able to reliably predict the impact of accelerated
depreciation, and impairment charges, legal and other settlements,
gains and losses from equity investments and other adjustments. In
addition, the company believes such a reconciliation would imply a
degree of precision and certainty that could be confusing to
investors. These items are uncertain, depend on various factors and
may have a material impact on our future GAAP results. In addition,
the non-GAAP financial guidance in this press release excludes the
impact of any potential additional future strategic acquisitions
and divestitures and any specified items that have not yet been
identified and quantified. The financial guidance is subject to
risks and uncertainties applicable to all forward-looking
statements as described elsewhere in this communication.
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