BMY Breaking New Ground in Schizophrenia Treatment

What You Need To Know

The recent FDA approval of Bristol Myers Squibb's (NYSE: BMY) drug, Cobenfy, represents a significant advancement in the treatment of schizophrenia, marking the introduction of the first new class of medication for the condition in over seven decades. Anticipated to be available in late October 2024, Cobenfy will be priced at $1,850 per month or $22,500 annually, prior to insurance coverage.

Schizophrenia affects approximately 3 million adults in the U.S., yet only about 1.6 million are currently receiving treatment, largely due to the high rate of discontinuation of existing medications stemming from side effects or lack of effectiveness. Cobenfy integrates two components: xanomeline, which lowers dopamine activity, and trospium, which addresses gastrointestinal side effects.

Following its $14 billion acquisition of Karuna Therapeutics in 2023, Bristol Myers Squibb anticipates that Cobenfy may initially have a gradual market uptake but could evolve into a multi-billion dollar revenue stream. The drug is also being investigated for potential applications in treating Alzheimer’s-related psychosis, bipolar disorder, and autism-related irritability.

Why This Is Important for Retail Investors

1. First new treatment in decades: Cobenfy is the first novel schizophrenia treatment in over 70 years, positioning Bristol Myers Squibb at the forefront of innovation in mental health care.

2. Revenue growth opportunity: With the potential to become a multi-billion dollar drug, Cobenfy offers significant long-term revenue growth as patents for other top-selling treatments expire.

3. Large market demand: Schizophrenia affects nearly 3 million adults in the U.S., with limited effective treatment options, creating strong demand for new therapies like Cobenfy.

4. Potential for expansion: Bristol Myers Squibb is studying Cobenfy’s use for other conditions such as Alzheimer’s-related psychosis and bipolar disorder, offering further revenue potential across multiple indications.

5. Mitigating patent cliffs: With other drugs nearing patent expiration, Cobenfy’s approval helps diversify Bristol Myers Squibb’s portfolio and offset potential revenue declines.

6. Strategic acquisition payoff: The $14 billion acquisition of Karuna Therapeutics that brought Cobenfy into its pipeline is showing value, supporting investor confidence in the company’s M&A strategy.

7. High-margin drug: The premium pricing of Cobenfy, along with government insurance coverage for most schizophrenia patients, could boost profit margins.