Acquisition centered on KarXT, which was
invented at PureTech, as a potential first-in-class treatment for
schizophrenia in adults
PureTech to receive approximately $293 million
gross proceeds from Karuna equity position in addition to being
eligible for further milestones and royalty payments based on KarXT
regulatory & commercial successes
PureTech intends to provide an update in the
coming days regarding its capital return plans
PureTech Health plc (Nasdaq: PRTC, LSE: PRTC) (“PureTech” or the
“Company”), a clinical-stage biotherapeutics company, today
announced the completed acquisition of its Founded Entity, Karuna
Therapeutics, Inc. ("Karuna”), by Bristol Myers Squibb (NYSE: BMY)
(“BMS”), which has acquired all outstanding common stock of Karuna
for $330.00 per share, for a total equity value of approximately
$14 billion.
"This acquisition recognizes the enormous potential of KarXT to
help millions of people with schizophrenia in need of a new
therapeutic option, and BMS will provide the global leadership to
maximize the reach of KarXT,” said Eric Elenko, Ph.D., Chief
Innovation Officer at PureTech, and a co-inventor of KarXT. “This
is also an important milestone for PureTech, where KarXT was
invented, and for Karuna, one of our Founded Entities advancing
innovative therapeutic approaches on the basis of validated
mechanisms. We congratulate the Karuna and BMS teams on the
completion of their transaction, and we wish them success in their
joint pursuit to make a difference for people living with
psychiatric and neurological conditions.”
If approved, KarXT will represent the first new mechanism of
action for patients with schizophrenia in over 50 years.
As of February 15, 2024, PureTech’s percentage ownership in
Karuna was approximately 2.3% on an outstanding voting share basis,
resulting in an estimated $293 million in gross proceeds to
PureTech upon the close of the transaction. PureTech directed
approximately $18.5 million towards the founding and development of
Karuna, and following the close of the BMS acquisition will have
generated approximately $1.1 billion in direct cash proceeds to
PureTech. Under its license agreement with Karuna, PureTech retains
the right to receive milestone payments upon the achievement of
certain regulatory approvals. PureTech is also owed certain
royalties on net sales and is eligible to receive up to $400
million in milestone payments under its agreement with Royalty
Pharma1.
The full text of the announcement from Bristol Myers Squibb is
as follows:
Bristol Myers Squibb Completes Acquisition
of Karuna Therapeutics, Strengthening Neuroscience KarXT,
Karuna’s Lead Asset, Is a Potential First-in-Class Treatment for
Schizophrenia with Multi-Billion Dollar Sales Potential Across
Multiple Indications
PRINCETON, N.J.-- 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.
About PureTech Health PureTech is a clinical-stage
biotherapeutics company dedicated to giving life to new classes of
medicine to change the lives of patients with devastating diseases.
The Company has created a broad and deep pipeline through its
experienced research and development team and its extensive network
of scientists, clinicians and industry leaders that is being
advanced both internally and through its Founded Entities.
PureTech's R&D engine has resulted in the development of 28
therapeutics and therapeutic candidates, including two that have
received both US FDA clearance and European marketing authorization
and a third (KarXT) that has been filed for FDA approval. A number
of these programs are being advanced by PureTech or its Founded
Entities in various indications and stages of clinical development,
including registration enabling studies. All of the underlying
programs and platforms that resulted in this pipeline of
therapeutic candidates were initially identified or discovered and
then advanced by the PureTech team through key validation
points.
For more information, visit www.puretechhealth.com or connect
with us on X (formerly Twitter) @puretechh.
Cautionary Note Regarding Forward-Looking Statements This
press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
All statements contained in this press release that do not relate
to matters of historical fact should be considered forward-looking
statements, including without limitation those statements that
relate to a forthcoming update with respect to our capital return
plans, our expectations around our therapeutic candidates and
approach towards addressing major diseases, and our future
prospects, developments, and strategies. The forward-looking
statements are based on current expectations and are subject to
known and unknown risks, uncertainties and other important factors
that could cause actual results, performance and achievements to
differ materially from current expectations, including, but not
limited to, those risks, uncertainties and other important factors
described under the caption "Risk Factors" in our Annual Report on
Form 20-F for the year ended December 31, 2022 filed with the SEC
and in our other regulatory filings. These forward-looking
statements are based on assumptions regarding the present and
future business strategies of the Company and the environment in
which it will operate in the future. Each forward-looking statement
speaks only as at the date of this press release. Except as
required by law and regulatory requirements, we disclaim any
obligation to update or revise these forward-looking statements,
whether as a result of new information, future events or
otherwise.
1 As of March 22, 2023, PureTech has sold its right to receive a
3% royalty from Karuna to Royalty Pharma on net sales up to $2
billion annually, after which threshold PureTech will receive 67%
of the royalty payments and Royalty Pharma will receive 33%.
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version on businesswire.com: https://www.businesswire.com/news/home/20240318509649/en/
PureTech Public Relations
publicrelations@puretechhealth.com Investor Relations
IR@puretechhealth.com
EU Media Ben Atwell, Rob Winder +44 (0) 20 3727 1000
ben.atwell@FTIconsulting.com
U.S. Media Nichole Bobbyn +1 774 278 8273
nichole@tenbridgecommunications.com
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