09:28 AM EDT, 09/27/2024 (MT Newswires) -- Bristol-Myers Squibb ( BMY ) shares rose early Friday as the biopharmaceutical company obtained approval from the US Food and Drug Administration for its Cobenfy drug to treat schizophrenia in adults.

The oral medication is designed to treat schizophrenia by targeting cholinergic receptors instead of dopamine receptors, which has traditionally been the standard of treatment, the FDA said in a statement late Thursday. Bristol Myers' stock rose nearly 4% in premarket activity.

Results from two phase 3 clinical trials showed that the product met its primary endpoint of statistically significant reductions of schizophrenia symptoms compared to a placebo, Bristol Myers said in a separate statement Thursday. The safety and tolerability profile of the drug has also been established across long-term studies, with the most common adverse reactions including nausea, dyspepsia, constipation and vomiting, the company said.

"This drug takes the first new approach to schizophrenia treatment in decades," said Tiffany Farchione, director of the psychiatry division and office of neuroscience in the FDA's center for drug evaluation and research. "This approval offers a new alternative to the antipsychotic medications people with schizophrenia have previously been prescribed."

Bristol Myers gained access to Cobenfy through its $14 billion acquisition of Karuna Therapeutics completed in March. The drug, which was previously known as KarXT, was initially invented by PureTech, which founded Karuna.

In a separate statement, PureTech said the FDA approval triggered two separate milestone payments totaling $29 million to the company under previous agreements with Royalty Pharma and Karuna. The firm added that it is entitled to potential future payments related to additional milestones, as well as about 2% royalties on net annual sales of more than $2 billion.

Truist Securities currently projects $4.2 billion in sales for Cobenfy, compared with the Street's consensus of $3.9 billion, it said in a client note emailed Friday. The drug is expected to cost customers $1,850 a month, the brokerage noted, citing a CNBC report.

Price: 52.11, Change: +1.99, Percent Change: +3.97