Bristol-Myers Squibb: Acquisition of Karuna Therapeutics Helps Offset Major Patent Losses

Bristol-Myers Squibb's announced $14 billion acquisition of Karuna Therapeutics yields neuroscience drug KarXT, which should help mitigate Bristol’s heavy patent losses over the next seven years. Bristol faces patent losses on cancer drug Opdivo and cardiovascular drug Eliquis over the next five to seven years, which creates a major headwind to growth. While Bristol holds a solid portfolio of recently launched drugs and a pipeline of next-generation drugs, the Karuna deal provides additional support to help offset patent losses. While we are still evaluating the deal, we don’t see the transaction as having a major impact on our fair value estimate or wide moat rating for Bristol.