Bristol-Myers' Acquisition Of Karuna Therapeutics Paves Way For Aggressive Global Marketing Of KarXT: Analyst
Portfolio Pulse from Nabaparna Bhattacharya
Bristol-Myers Squibb Company (BMY) has agreed to acquire Karuna Therapeutics, Inc. (KRTX) for $330 per share, totaling $14.0 billion. H.C. Wainwright analyst Raghuram Selvaraju downgraded KRTX to Neutral from Buy, raising the price target to $330 from $300. The acquisition is expected to close in the first half of 2024, ahead of the U.S. approval decision for KarXT, Karuna's lead candidate. Eli Lilly And Company (LLY) will receive milestone payments and royalties from KarXT sales due to its involvement in the development of one of the drug's components. KRTX shares are trading slightly lower following the news.
December 26, 2023 | 7:02 pm
News sentiment analysis
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NEUTRAL IMPACT
Karuna Therapeutics has been downgraded to Neutral from Buy by H.C. Wainwright, with a raised price target to $330, matching the acquisition price offered by Bristol-Myers.
The downgrade of KRTX to Neutral reflects the acquisition price, suggesting limited upside potential for the stock in the short term. The price target increase to $330 is in line with the acquisition offer, indicating a neutral short-term impact.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100
POSITIVE IMPACT
Bristol-Myers Squibb's acquisition of Karuna Therapeutics positions it to aggressively market KarXT globally, leveraging its experience with neuroscience drugs.
The acquisition of Karuna by Bristol-Myers is a significant strategic move, likely to be viewed positively due to Bristol's expertise in neuroscience. This could lead to increased investor confidence and a potential short-term uptick in BMY's stock price.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 90
POSITIVE IMPACT
Eli Lilly will receive milestone payments and royalties from the sales of KarXT due to its role in the development of the drug's component, xanomeline.
Eli Lilly's receipt of milestone payments and royalties is a positive outcome from the acquisition, likely to provide a modest boost to LLY's revenue stream and could be seen favorably by investors in the short term.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70