BMY
Bristol Myers Squibb CO
NYSE
8-K: Bristol Myers Squibb Finalizes Karuna Therapeutics Acquisition, Bolstering Neuroscience Pipeline
Sentiment:
Merger Announcement
18 March 2024 8:56 AM
Bristol Myers Squibb has completed its acquisition of Karuna Therapeutics, adding a potential first-in-class schizophrenia treatment to its portfolio.
Worse than expected
The acquisition is expected to dilute 2024 non-GAAP EPS by approximately $0.30.
A one-time, non-deductible Acquired IPR&D charge of approximately $12 billion will significantly impact 2024 EPS by approximately $5.93.
Summary
- Bristol Myers Squibb (BMS) has successfully acquired Karuna Therapeutics for $330 per share in cash.
- The acquisition adds KarXT, a novel antipsychotic for schizophrenia, to BMS's portfolio.
- KarXT has a PDUFA date of September 26, 2024, for the treatment of schizophrenia in adults.
- The transaction is expected to dilute BMS's non-GAAP earnings per share by approximately $0.30 in 2024 due to financing costs.
- BMS anticipates a one-time, non-deductible Acquired In-Process Research and Development (IPR&D) charge of approximately $12 billion, impacting 2024 EPS by about $5.93.
- BMS will provide an updated financial outlook when it reports first quarter 2024 results on April 25, 2024.
Sentiment
Score: 6
Explanation: The acquisition is strategically positive for BMS's long-term growth, but the short-term financial impacts, such as EPS dilution and a large IPR&D charge, temper the overall sentiment.
Positives
- The acquisition strengthens BMS's neuroscience portfolio with the addition of KarXT.
- KarXT has multi-billion dollar sales potential across multiple indications.
- The transaction aligns with BMS's commitment to strengthening its growth profile.
- BMS expects to offset the operational expenses of the transaction through cost efficiencies.
- BMS's strong financial profile allows for continued investment in growth and shareholder returns.
Negatives
- The acquisition is expected to dilute BMS's non-GAAP diluted earnings per share by approximately $0.30 in 2024.
- A one-time, non-deductible Acquired IPR&D charge of approximately $12 billion will significantly impact 2024 EPS.
- The transaction will result in a $5.93 negative impact on both 2024 first quarter and full-year GAAP and non-GAAP EPS.
Risks
- There is a risk that the expected benefits or synergies of the acquisition will not be realized.
- Legal proceedings related to the merger agreement could pose a risk.
- Unanticipated difficulties or expenditures related to the transaction could arise.
- There are risks associated with the response of business partners and competitors to the transaction.
- Potential difficulties in employee retention could occur as a result of the acquisition.
- The completion of BMS's quarter-end closing process could result in changes to preliminary estimates.
Future Outlook
BMS expects to offset the operational expenses of the transaction through cost efficiencies and will provide an updated financial outlook on April 25, 2024, when it reports first quarter 2024 results. The company also anticipates potential expansion of KarXT to additional indications.
Management Comments
- 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 BMSs growth profile in the latter half of the decade and beyond.
- We look forward to working with Karunas talented team to bring KarXT to patients with schizophrenia later this year.
Industry Context
This acquisition reflects a broader trend in the pharmaceutical industry of companies seeking to expand their pipelines through strategic acquisitions, particularly in high-growth areas like neuroscience. The acquisition of Karuna and its lead asset KarXT positions BMS to compete in the schizophrenia treatment market.
Comparison to Industry Standards
- The acquisition of Karuna is similar to other large pharmaceutical companies acquiring biotech firms with promising drug candidates.
- The $330 per share acquisition price is a premium reflecting the potential of KarXT.
- The $12 billion IPR&D charge is significant, but not uncommon for large acquisitions of companies with promising late-stage assets.
- Other companies such as AbbVie and Pfizer have also made large acquisitions to bolster their pipelines in recent years.
- The focus on neuroscience is a common theme as companies seek to address unmet needs in areas like schizophrenia and Alzheimer's.
Stakeholder Impact
- Shareholders will experience short-term EPS dilution but may benefit from long-term growth.
- Employees of Karuna will become part of BMS.
- Patients may benefit from the development and potential launch of KarXT.
- Creditors will be impacted by the new debt issuance to finance the acquisition.
Next Steps
- BMS will work to integrate Karuna into its operations.
- BMS will prepare for the potential launch of KarXT following its PDUFA date.
- BMS will provide an updated financial outlook on April 25, 2024.
- BMS will continue to explore additional indications for KarXT.
Legal Proceedings
- There is a risk of legal proceedings related to the merger agreement.
Key Dates
- March 18, 2024: Date of the acquisition completion and press release.
- September 26, 2024: PDUFA date for KarXT for the treatment of schizophrenia in adults.
- April 25, 2024: Date when BMS will provide an update to its financial outlook with Q1 2024 results.
Keywords
acquisition, Karuna Therapeutics, Bristol Myers Squibb, KarXT, schizophrenia, neuroscience, antipsychotic, PDUFA, IPR&D, merger
BMY
Bristol Myers Squibb CO
NYSE
Sector: TBD
Filings with Classifications
Worse than expected
24 April 2025 11:45 AM
Quarterly Report
- Total revenues decreased by 6% due to generic erosion and changes in the U.S. Medicare Part D program.
- Legacy Portfolio revenues declined by 20% due to generic erosion of key products.
- U.S. revenues decreased by 7%, reflecting challenges in the domestic market.
Better than expected
24 April 2025 7:11 AM
Earnings Release
- The company raised its full-year revenue guidance from approximately $45.5 billion to a range of approximately $45.8 billion to $46.8 billion.
- The company raised the midpoint of its 2025 non-GAAP EPS guidance by $0.15 per share to an expected range of $6.70 to $7.00.
Worse than expected
15 April 2025 9:00 PM
Proxy Statement
- GAAP diluted EPS was negative ($4.41) in 2024.
- Non-GAAP diluted EPS decreased by 85% versus 2023 to $1.15.
Worse than expected
12 February 2025 12:52 PM
Annual Report (Form 10-K)
- GAAP diluted loss per share was $(4.41), a decrease of $8.27.
- Non-GAAP EPS was $1.15, a decrease of $6.36.
- The GAAP EPS decrease was largely due to a one-time, non-deductible Acquired IPRD charge from the Karuna acquisition and SystImmune collaboration, impacting EPS by approximately $6.28.
Worse than expected
31 October 2024 11:43 AM
Quarterly Report
- The company's net loss of $9.02 billion year-to-date is significantly worse than the net income of $6.26 billion for the same period last year, primarily due to a $12.1 billion one-time charge related to the acquisition of Karuna.
Better than expected
31 October 2024 7:52 AM
Quarterly Report
- The company raised its full-year revenue and EPS guidance, indicating better than expected performance.
- The growth portfolio exceeded expectations with 18% growth, or 20% when adjusted for foreign exchange.
- The approval of Cobenfy was a significant positive development.
Worse than expected
26 July 2024 12:04 PM
Quarterly Report
- The GAAP EPS was significantly worse than expected due to a $12.1 billion one-time, non-tax deductible charge for the acquisition of Karuna and other acquisition related expenses.
Better than expected
26 July 2024 7:46 AM
Quarterly Report
- The company's revenue and non-GAAP EPS exceeded expectations, leading to an increase in full-year guidance.
- The growth portfolio performed exceptionally well, driving overall revenue growth.
- Multiple regulatory approvals and positive clinical trial results indicate strong pipeline progress.
Worse than expected
3 May 2024 6:45 PM
SEC Form 4
- The cancellation of market share units due to the minimum payout factor not being achieved suggests that the company's performance did not meet expectations.
Worse than expected
25 April 2024 12:38 PM
Quarterly Report
- The company reported a net loss of $11.9 billion, significantly worse than the $2.3 billion profit in the same period last year.
- Non-GAAP EPS was a loss of $4.40, substantially worse than the profit of $2.05 in the first quarter of 2023.
- The large IPRD charge of $12.9 billion due to acquisitions significantly impacted the bottom line.
Worse than expected
25 April 2024 7:47 AM
Quarterly Report
- The company reported a significant GAAP loss per share of $(5.89) and a non-GAAP loss per share of $(4.40), primarily due to the impact of recent acquisitions.
- The revised non-GAAP EPS guidance for 2024 was significantly lowered to $0.40 $0.70, reflecting the negative impact of recent transactions.
Worse than expected
18 March 2024 8:56 AM
Merger Announcement
- The acquisition is expected to dilute 2024 non-GAAP EPS by approximately $0.30.
- A one-time, non-deductible Acquired IPR&D charge of approximately $12 billion will significantly impact 2024 EPS by approximately $5.93.
Capital raise
22 February 2024 4:15 PM
Debt Offering Announcement
- The document details a $12.5 billion debt offering by Bristol-Myers Squibb.
- The offering includes various series of notes with different maturities and interest rates.
- The proceeds are intended to fund acquisitions and for general corporate purposes.
Delay expected
14 February 2024 4:32 PM
Current Report
- Payment could be delayed beyond the scheduled expiration date if Tutanota extends its offer.
Worse than expected
2 February 2024 7:46 AM
Quarterly Report
- The company's full-year revenue decreased by 2% compared to the previous year.
- Fourth-quarter GAAP and non-GAAP EPS decreased compared to the same period in the previous year.
- The company's non-GAAP EPS guidance for 2024 is lower than the 2023 result.
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