Bristol Myers Squibb BMY announced that the FDA has approved xanomeline and trospium chloride (formerly KarXT), an oral medication for the treatment of schizophrenia, in adults.

The drug was approved under the brand name Cobenfy.

Shares were up in pre-market trading.

Year to date, shares of Bristol Myers have lost 2.3% compared with the industry’s 2.7% decline.

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BMY’s Schizophrenia Treatment Broadens Portfolio

Cobenfy represents the first new pharmacological approach to treat schizophrenia in decades. The drug boasts a mechanism of action that’s different from current therapies. It’s aimed at treating schizophrenia by selectively targeting M 1 and M 4 receptors in the brain without blocking D 2 receptors.

The FDA approval is supported by data from the EMERGENT clinical program. This program includes three placebo-controlled efficacy and safety trials and two open-label trials evaluating the long-term safety and tolerability of Cobenfy for up to one year.

Cobenfy met its primary endpoint, demonstrating statistically significant reductions of schizophrenia symptoms compared to placebo in the late-stage EMERGENT-2 and EMERGENT-3 trials.

The safety and tolerability profile of Cobenfy has been established across acute and long-term trials. Cobenfy has no atypical antipsychotic class warning and precaution. Also, it does not have a boxed warning.

However, the prescribing information includes warnings that Cobenfy can cause urinary retention, increased heart rate, decreased gastric movement or angioedema (swelling beneath the skin) of the face and lips.

Schizophrenia, a disabling mental illness, affects approximately 2.8 million people in the United States.  Cobenfy offers a new option to manage this challenging condition by leveraging a novel pathway.

The acquisition of Karuna Therapeutics added KarXT to BMY’s pipeline.

Newer Drugs Boost BMY's Growth

The approval of Cobenfy for schizophrenia broadens BMY’s diverse portfolio and validates the acquisition of Karuna Therapeutics. It is the first antipsychotic drug approved to treat schizophrenia that targets cholinergic receptors as opposed to dopamine receptors, which have long been the standard of care.

The drug’s differentiated profile gives it an edge over currently available antipsychotics.

BMY’s newer drugs like Opdualag, Reblozyl and Breyanzi have put up a good performance to stabilize its revenue base in the face of generic competition for Revlimid. A strong uptake of Cobenfy should bolster BMY’s top line.

Last month, AbbVie ABBV acquired Cerevel Therapeutics and added promising clinical-stage assets that complement AbbVie's emerging neuroscience pipeline.

The acquisition added emraclidine, a potential best-in-class, next- generation antipsychotic to ABBV’s pipeline. The candidate is being studied for the treatment of schizophrenia.

Emraclidine has shown promising efficacy and safety in a phase Ib study. The candidate is currently completing two phase II studies that were designed to be registration enabling.

Zacks Rank & Stocks to Consider

BMY currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the pharma/biotech sector are Krystal Biotech, Inc. KRYS and Fulcrum Therapeutics, Inc. FULC, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, estimates for Krystal Biotech’s 2024 earnings per share have increased from $2.09 to $2.38. Earnings per share estimates for 2025 have improved from $4.33 to $7.31. Year to date, shares of KRYS have risen 49.7%.

KRYS’ earnings beat estimates in three of the trailing four quarters and missed the same once, the average surprise being 43.8%.

In the past 60 days, estimates for Fulcrum Therapeutics’ 2024 loss per share have narrowed from $1.33 to 28 cents. Loss per share estimates for 2025 have narrowed from $1.71 to $1.14.

 

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