LONDON (ShareCast) - (Sharecast News) - Biopharmaceuticals giant Bristol Myers Squibb has announced it is spending $14bn to purchase Karuna Therapeutics, which develops treatments for people living with psychiatric and neurological conditions.

BMS is paying $330 per share, a 53% premium to Thursday's closing price of $215.19, as it looks to take control of the Karuna's experimental schizophrenia treatment.

Including Karuna's $1.3bn of cash on hand, the net acquisition cost is reduced to $12.7bn. The deal was unanimously approved by the boards of both groups.

Karuna's lead asset, KarXT, is currently awaiting potential government approval for the treatment of schizophrenia in adults, but is also in development for other conditions related to Alzheimer's and bipolar disorder.

According to Mizuho Securities analysts cited by Dow Jones, KarXT's annual sales could exceed $6bn if it is approved for all its potential uses.

"There are tremendous opportunities in neuroscience, and Karuna strengthens our position and accelerates the expansion and diversification of our portfolio in the space. We expect KarXT to enhance our growth through the late 2020s and into the next decade," said BMS chief executive Christopher Boerner in a statement.

"This transaction fits squarely within our business development priorities of pursuing assets that are strategically aligned, scientifically sound, financially attractive, and have the potential to address areas of significant unmet medical need."

The move follows AbbVie's 6 December acquisition of neuroscience drugmaker Cereval Therapeutics for $8.7bn, as the industry's bigger players battle to get their hands on potentially lucrative central nervous system treatments.

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