The FDA authorizes Bristol Myers Squibb's novel schizophrenia medication, marking a significant advancement in treatment options after years.

• The FDA approved Bristol Myers Squibb's highly anticipated schizophrenia drug, marking the first novel type of treatment for the debilitating, chronic mental disorder in over seven decades.
• The brand name Cobenfy pill, which is expected to be sold twice daily, will be available in late October.
• According to Bristol Myers Squibb executives, a month's supply of Cobenfy will cost $1,850, while an annual supply will cost $22,500 before insurance and other rebates.

The FDA approved Cobenfy, a highly anticipated schizophrenia drug, which is the first novel type of treatment for the debilitating, chronic mental disorder in over seven decades.

Schizophrenia is a mental disorder that affects a person's thoughts, emotions, and behavior, resulting in symptoms such as paranoia, delusions, hallucinations, and changes in emotions, movements, and behavior. These symptoms can significantly impact a patient's daily life, making it challenging to attend school or work, socialize, and perform routine tasks. The majority of diagnoses occur between the late teens and early 30s.

The twice-daily pill, Cobenfy, which is a new option for the nearly 3 million adults in the U.S. living with schizophrenia, is expected to be available in late October, according to Bristol Myers Squibb executives.

According to the drugmaker, only 1.6 million of those patients are treated for the condition, and 75% of them stop taking existing medications in the first 18 months because they struggle to find treatments that are effective or easy for them to tolerate.

Bristol Myers Squibb could benefit greatly from the long-term sales potential of Cobenfy, a drug acquired from Karuna Therapeutics, as the company seeks to replace revenue lost from expiring patents on top-selling treatments.

Guggenheim analysts view Cobenfy as a "long-term multi-billion dollar opportunity" for Bristol Myers Squibb, but they predict a slow launch, which may not significantly impact the company's top line in 2024 and 2025.

According to Andrew Miller, founder and former president of research and development of Karuna Therapeutics and now an advisor to Bristol Myers Squibb, there is a potential for a transformative moment in how we treat and discuss schizophrenia. Unfortunately, this population, which is often disadvantaged, does not receive the attention they deserve from a research and healthcare perspective.

"The most crucial moment will occur in five or ten years when we reflect on our actions and realize we've made a difference," he stated. "We've impacted people's lives, enhanced outcomes, and given caregivers and physicians an additional resource to utilize."

The monthly cost of Cobenfy is $1,850, while the annual cost is $22,500 before insurance and rebates, according to Bristol Myers Squibb executives.

According to Bristol Myers Squibb, around 80% of patients with schizophrenia are covered by government insurance, and they expect most of these patients, particularly those enrolled in Medicare and Medicaid plans, to have minimal out-of-pocket costs for the drug. The company stated that pricing for the drug is in line with existing branded oral schizophrenia treatments.

Executives announced that the company plans to introduce a program to assist patients in affording Cobenfy.

The extent to which the program will enhance access for individuals without insurance remains uncertain.

Abilify, an antipsychotic treatment, is available at a lower cost as a generic copycat, with prices starting at $16 for 30 once-daily tablets with free coupons from GoodRx. This means that patients without insurance can access this treatment at a more affordable price.

The existing schizophrenia medications target the dopamine receptors in the brain to alleviate symptoms in patients.

Antipsychotic treatments for schizophrenia can have serious side effects, such as weight gain, excessive fatigue, and uncontrollable movements, which can cause patients to stop treatment. Additionally, about one-third of people with schizophrenia are resistant to conventional antipsychotic treatments, according to WebMD.

Dr. Samit Hirawat, Bristol Myers Squibb's chief medical officer, announced that Cobenfy is the first treatment approved from a new class of drugs that do not directly block dopamine to improve symptoms of schizophrenia.

Cobenfy, a drug used to treat anxiety and depression, consists of two parts: xanomeline, which activates muscarinic receptors in the brain to decrease dopamine activity without side effects, and trospium, which reduces gastrointestinal side effects associated with xanomeline, such as nausea, vomiting, diarrhea, and constipation.

"Adam Lenkowsky, Bristol Myers Squibb's chief commercialization officer, stated to CNBC that most patients have already tried one or two of their products. Physicians are excited about the opportunity to prescribe these treatments without side effects and to achieve unprecedented efficacy."

As physicians become more comfortable with prescribing Cobenfy to patients, the company anticipates that it will eventually become the standard treatment for schizophrenia.

The drug's high cost may restrict its use to patients who have already tried and failed with other existing treatments, according to Nina Vadiei, clinical associate professor of pharmacotherapy and translational sciences at the University of Texas at Austin College of Pharmacy.

"Vadiei, a clinical psychiatric pharmacist at San Antonio State Hospital, stated that if it were up to him, he wouldn't necessarily say we have to try X number of antipsychotics first. However, he knows from experience in a hospital setting that this is likely what will have to happen due to cost constraints."

Trial results and upcoming research

The drug Cobenfy was approved based on data from three clinical trials and two long-term studies. These studies showed that Cobenfy significantly decreased symptoms of schizophrenia compared to a placebo, according to Bristol Myers Squibb.

Miller stated that the studies showed that Cobenfy mostly caused mild to moderate side effects, which were mainly gastrointestinal and subsided over time.

The approval of schizophrenia treatment by Bristol Myers Squibb on Thursday could be just the start for Cobenfy.

Bristol Myers Squibb anticipates releasing data from ongoing late-stage clinical trials evaluating Cobenfy's potential in treating Alzheimer's disease patients with psychosis in 2026.

Additionally, the company intends to investigate Cobenfy's ability to alleviate bipolar mania and irritability linked to autism.

Cobenfy is a product that contains multiple indications, as it is being developed not only for schizophrenia but also for six other potential uses, according to Hirawat.

— CNBC's Angelica Peebles contributed to this report.