18
March 2024
PureTech Health
plc
Bristol Myers Squibb
Completes Acquisition of PureTech's Founded Entity Karuna
Therapeutics for $14 Billion
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 Pharma[1].
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.
Contact:
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
