Bristol-Myers Squibb has witnessed a notable rise in its share prices early Friday following the approval it received from the US Food and Drug Administration (FDA) for its innovative drug, Cobenfy, aimed at treating schizophrenia in adults. This new oral medication represents a significant shift in the therapeutic approach to managing schizophrenia, as it focuses on targeting cholinergic receptors rather than the long-established dopamine receptors.
This important development was highlighted in a statement issued by the FDA late Thursday. Following the announcement, Bristol Myers' stock surged nearly 4% in premarket activity. Two phase 3 clinical trials conducted to evaluate the effectiveness of Cobenfy demonstrated that it achieved its primary endpoint—showing statistically significant reductions in schizophrenia symptoms when compared to a placebo.
Furthermore, Bristol Myers disclosed in a separate statement that the safety and tolerability profile of Cobenfy has been well-established through long-term studies. The trials revealed that the most common adverse reactions observed were nausea, dyspepsia, constipation, and vomiting. Tiffany Farchione, who serves as the director of the psychiatry division and the office of neuroscience within the FDA’s center for drug evaluation and research, commented, "This drug takes the first new approach to schizophrenia treatment in decades.
This approval offers a new alternative to the antipsychotic medications that people with schizophrenia have previously been prescribed." Bristol Myers gained access to Cobenfy through its significant acquisition of Karuna Therapeutics, valued at $14 billion, which was finalized in March. Previously known as KarXT, the drug was originally created by PureTech, the founding company of Karuna.
In a following statement, PureTech announced that the FDA's approval has triggered two separate milestone payments, which together total $29 million, based on existing agreements with Royalty Pharma and Karuna. Additionally, PureTech mentioned its entitlement to potential future payments linked to further milestones along with approximately 2% in royalties on net annual sales surpassing $2 billion. Current projections by Truist Securities estimate that Cobenfy could generate sales of $4.2 billion, a figure that surpasses the broader market's consensus estimate of $3.9 billion.
The brokerage also indicated that the anticipated cost for customers is set at $1,850 per month, according to a report by CNBC. Price: 52.11, Change: +1.99, Percent Change: +3.97.