Bristol Cobenfy approval draws optimism from Street, though with caveats

The U.S. FDA’s approval Thursday of Bristol Myers Squibb’s (NYSE:BMY) novel antipsychotic Cobenfy (xanomeline and trospium chloride) for schizophrenia could significant influence treatment of the condition, though other considerations needs to be met, according to some Street analysts.

Overall, the Street has reacted favorably to Cobenfy, which is the first therapy targeting cholinergic receptors for schizophrenia. Existing therapies tend to target dopamine receptors. However, many patients do not respond well to them.

Cobenfy is entering a crowded antipsychotic market that is dominated by generic drugs. Generics of Johnson & Johnson’s (JNJ) Risperdal (risperidone), Eli Lilly’s (LLY) Zyprexa (olanzapine), AstraZeneca’s (AZN) Seroquel (quetiapine), and Otsuka’s (OTCPK:OTSKF)(OTCPK:OTSKY) Abilify (aripiprazole). The four drugs make up 80% of the market for schizophrenia treatments.

Cobenfy has a list price of $1850 a month.

Truist’s Srikripa Devarakonda noted that while Cobenfy should be well received by clinicians and patients, uptake of the drug will be particularly contingent on access by Medicare and Medicaid beneficiaries, where 80% of eligible patients for Cobenfy fall.

She models peak sales at $3.2B compared to a consensus of $2.9B.

Bristol is already running registrational trials in other indications, including Alzheimer’s disease psychosis and adjunctive psychosis, according to Devarakonda, who added the company also plans clinical trials in Alzheimer’s psychosis and bipolar disorder.

Raymond James’ Sean McCutcheon said that while the approval is a “major piece” of Bristol’s growth strategy in the latter half of the decade, he is not modifying his modeling assumptions.

Morgan Stanley’s Terence Flynn noted that Cobenfy’s labeling does not have a “black box” warning, an incremental positive, and food restrictions surrounding dosing could differentiate it from AbbVie’s (NYSE:ABBV) emraclidine, widely seen as a potential future competitor.

Emraclidine and Cobenfy have different mechanisms of action. The former is a M4 positive allosteric modulator while the latter is a M1/M4 a dual muscarinic receptor agonist.

Devarakonda noted that while emraclidine has a potential dosing advantage — it is taken once a day compared to Cobenfy dosed twice daily — the latter has first mover advantage.