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Investing.com -- Morgan Stanley identified Bristol-Myers Squibb (NYSE:BMY) as a catalyst-driven idea ahead of a key data readout for Cobenfy in Alzheimer’s Disease Psychosis (ADP), expected in late third or early fourth quarter.
Cobenfy, approved by the U.S. Food and Drug Administration for schizophrenia in September 2024, is “one of the company’s key new product cycles,” according to Morgan Stanley (NYSE:MS).
The drug was added to BMY’s pipeline through its acquisition of Karuna in December 2023 and is central to its strategy to offset upcoming losses of exclusivity.
The upcoming readout from the ADEPT-2 Phase 3 trial is the first of three studies evaluating Cobenfy in ADP.
BMY has indicated that approval in this indication would require positive results from two Phase 3 trials.
The analysts wrote, “In the event of positive ADEPT-2 data… we expect the magnitude of potential upside stock move in BMY shares to be somewhat driven by how Cobenfy ramps in schizophrenia in 2H25.”
Morgan Stanley outlined three scenarios for the stock: a low-single-digit percentage gain if script growth remains muted; a mid-single-digit gain if growth accelerates; or a decline of more than 5% in the event of a trial failure.
“Our base case expectation is Scenario 1 (40% probability),” Morgan Stanley said, adding that it models risk-adjusted 2033 Cobenfy sales of $5 billion, with $1.9 billion coming from ADP at a 60% probability of success.
The note also pointed to recent moderation in Cobenfy prescriptions for schizophrenia, which could influence market reaction depending on second-half trends.