Bristol-Myers Squibb's (BMS) schizophrenia drug, KarXT, is facing increased scrutiny as its FDA approval date approaches. Concerns have been raised regarding potential labeling restrictions that could impact its market performance. An analyst from Morgan Stanley has reiterated a Sell rating on BMS stock, citing these labeling uncertainties.
Labeling Concerns and Market Impact
The primary concern revolves around the possibility of KarXT carrying a black box warning, along with specific language addressing cardiovascular risks and the impact of food on the drug's efficacy. Such labeling could put KarXT at a disadvantage compared to other antipsychotics currently available, including AbbVie's emraclidine, which is also in development. While the probability of KarXT receiving approval for schizophrenia is estimated at a high 90%, the nature of the label remains a critical factor.
Analyst's Perspective
According to Morgan Stanley analyst Terence Flynn, investor expectations are largely optimistic, anticipating a 'clean' label for KarXT. This scenario would likely result in a modest increase in BMS's stock value. However, Flynn suggests that even minor labeling issues are not expected to significantly hinder KarXT’s market share, given its clinical profile. The stock is anticipated to react negatively, potentially decreasing by around 5%, if the label includes restrictive measures like extensive cardiovascular monitoring.
Future Growth Prospects
For BMS to see substantial stock growth from KarXT, the drug would likely need to demonstrate significant efficacy in treating Alzheimer’s disease psychosis or benefit from the failure of AbbVie’s emraclidine in its pivotal program. The analyst's assessment reflects a cautious stance on BMS’s near-term launch outlook and broader market dynamics.
Additional Analyst Ratings
In a separate report also released on September 3, Barclays assigned a Sell rating to BMS stock with a price target of $42.00, further underscoring the concerns surrounding KarXT's market potential.
