By Josh Nathan-Kazis & Elsa Ohlen

Bristol Myers Squibb said late Tuesday its new schizophrenia medicine had failed in a late-stage trial, raising new questions about the company's long-term prospects.

U.S. patents protecting some of Bristol's top-selling drugs, including the cancer medicine Opdivo, will expire in the coming years, and analysts had been counting on the schizophrenia drug, called Cobenfy, to help fill the gap.

The new data may have scuttled that outlook.

First approved in late 2024, Cobenfy was the first new type of schizophrenia medicine approved in decades, and investors anticipated significant demand, given the debilitating side effect profiles of current schizophrenia medicines.

In a November note, Leerink Partners analyst David Risinger said peak sales for Cobenfy could top $10 billion.

That's now looking very unlikely.

The latest trial tested Cobenfy as an add-on to other, commonly-used schizophrenia drugs. Bristol said that in the Phase 3 trial, there was not a statistically significant difference in symptoms between patients who added Cobenfy to the commonly-used regimen, and those who added a placebo.

In a note late Tuesday, Leerink's Risinger wrote that the result was bad news for Cobenfy, "because we think that the adjunctive trial failure demostrates that Cofenfy's efficacy is modest." He cut his estimate for Cobenfy's 2030 sales by 55%, to $2.6 billion from $5.8 billion, and cut his target price on Bristol to $55 from $68, though he mantained an Outperform rating.

Bristol shares were down 2% in Wednesday's session, after falling as much as 5.9% in premarket trading.

Bristol is testing Cobenfy in a long list of other conditions, but analysts wrote Tuesday and Wednesday that they are now worried about those trials, too.

"We see this as risk to the success of the drug in the myriad of indications in which Bristol is developing KarXT," wrote Raymond James analyst Sean McCutcheon, using another name for the schizophrenia drug.

Bristol said that it will continue to analyze the data, and noted that while the drug did not show a statistically significant improvement in symptoms, there was a small numerical improvement.

The company is set to report first-quarter earnings Thursday morning.

Write to Elsa Ohlen at elsa.ohlen@barrons.com

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April 23, 2025 10:29 ET (14:29 GMT)

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