By Bhanvi Satija and Michael Erman
(Reuters) -The U.S. Food and Drug Administration approved Bristol Myers Squibb's schizophrenia drug late on Thursday, making it the first new type of antipsychotic medicine in decades.
The labeling information of the treatment, Cobenfy, does not include a warning about the risk of increased mortality in some elderly patients, unlike other commonly used drugs for the disorder.
It also comes without common side effects, such as weight gain and movement disorders, found in other drugs.
The lack of a warning sent Bristol Myers' shares up 6.3% at $53.28 in premarket trading on Friday.
Bristol Myers obtained drug Cobenfy, also known as KarXT, through its $14 billion takeover of Karuna Therapeutics last year.
The drugmaker is banking on the treatment to help power growth as patents on its older cancer drug, Revlimid, and blood thinner Eliquis expire later this decade.
William Blair analysts expect $2.5 billion in U.S. sales for Cobenfy by 2030. Bristol said it expects to make the drug available to patients by late October at a list price of $1,850 a month or about $22,500 annually.
FDA's approval was based on data from two studies in which patients on the drug experienced a meaningful reduction in symptoms.
The drug is the first approved antipsychotic that targets cholinergic receptors as opposed to dopamine receptors, which have long been the standard of care.
"So there is an unmet need still in the treatment of schizophrenia, particularly in patients who may show response to the positive symptoms but still have residual negative symptoms," said Alan Schatzberg, psychiatry professor at Stanford University School of Medicine.
Schatzberg said the drug could be a "game changer" for schizophrenia patients.
While antipsychotics that target dopamine receptors reduce symptoms of the disorder, their use also causes side effects such as tremors or involuntary movements and sleepiness.
Common side effects from Cobenfy in trials included vomiting, nausea, constipation, among others.
The FDA said Cobenfy should not be prescribed to patients with urinary retention, or those with moderate or severe kidney or liver disease.
Bristol expects 80% of the drug's patient population to be covered under Medicare and Medicaid insurance plans in the 12 to 18 months of its launch.
"Our focus is to ensure that all of these coverage decisions are made very quickly after launch, so we can have access for patients," said Chief Commercialization Officer Adam Lenkowsky.
The company expected to see significant utilization of the drug by the end of 2025, he added.
Currently approved antipsychotic drugs include Vanda Pharmaceuticals' Fanapt, AbbVie's Vraylar and generic drugs such as olanzapine, quetiapine and aripiprazole, among others.
AbbVie is also developing newer drugs for the disease after its $8.7 billion takeover of Cerevel Therapeutics late last year.
Reviva Pharmaceuticals, Neurocrine Biosciences and Celon Pharma are developing treatments for schizophrenia as well.
Schizophrenia causes persistent delusions and hallucinations and significantly impairs the way patients perceive reality.
(Reporting by Puyaan Singh and Bhanvi Satija in Bengaluru and Michael Erman in New York; Editing by Krishna Chandra Eluri, Alan Barona and Shreya Biswas)
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