Bristol Myers Squibb to snap up Karuna Therapeutics for $14 billion

Pharmaceutical dealmaking didn’t wind down for the holidays. Bristol Myers Squibb (BMS) announced Dec. 22 that it would buy neuroscience-focused Karuna Therapeutics for a whopping $14.0 billion; 4 days later it said it would buy the radiopharmaceutical firm RayzeBio for $4.1 billion.

Karuna has a pipeline of molecules in various stages of development, but the prize is its lead compound, KarXT, which combines the small molecules xanomeline and trospium. Karuna recently submitted KarXT to the US Food and Drug Administration for approval to treat schizophrenia in adults. The antipsychotic is a M1/M4 muscarinic receptor agonist that Karuna hopes will become available for patients in late 2024.

“There are tremendous opportunities in neuroscience, and Karuna strengthens our position and accelerates the expansion and diversification of our portfolio in the space,” BMS CEO Christopher Boerner says in a news release announcing the deal. “We expect KarXT to enhance our growth through the late 2020s and into the next decade.”

BMS is the second big drug company to strike a major neuroscience deal this month. On Dec. 6, AbbVie agreed to purchase Cerevel Therapeutics for $8.7 billion.

In a note to investors, Paul Matteis at the investment bank Stifel describes the deal as an “outstanding outcome” for Karuna. Industry watchers had pegged a purchase of Karuna as one of the key deals to look for in 2023.

“More broadly this is also very significant for the neuroscience space where many investors have been waiting for a wave of M&A for years, and it’s validating that novel mechanisms in psychiatry have blockbuster potential even in the face of many generics,” he writes.

The RayzeBio purchase is the latest deal in the hot radiopharma space, where companies link radioactive isotopes to tumor-targeting compounds to try to selectively kill cancer cells. RayzeBio is enrolling participants in a Phase 3 trial of its lead compound, RYZ101, an actinium-225-delivering molecule designed to treat gastroenteropancreatic neuroendocrine cancer.

Actinium-225 is an α generator, giving off multiple α particles during the isotope’s degradation chain. α Particles are made up of two protons and two neutrons and don’t travel far through tissues, which means they are more targeted than the electron- or positron-generating β emitters that make up most of the radiopharmaceuticals approved by the FDA.

“It is our view that the deal emphasizes the migration in the field from beta-emitting isotopes, like lutetium-177, to alpha-emitting isotopes, like actinium-225,” Andy Hsieh at the investment firm William Blair says in a note to investors.

Along with its drug pipeline, RayzeBio brings a facility in Indianapolis that is expected to begin production of radiopharmaceuticals in the first half of 2024. That detail “shows the importance of owning at least a portion of manufacturing capabilities within the radiopharmaceuticals industry,” Hsieh says in the note.