The US Food and Drug Administration has approved Bristol-Myers Squibb's drug for schizophrenia

The Food and Drug Administration approved it Thursday Bristol Myers SquibbThe prospective schizophrenia drug, Cobenfy, is the first new type of treatment for the debilitating chronic mental disorder in more than seven decades.

Schizophrenia affects the way a person thinks, feels, and acts, and can cause paranoia, delusions, hallucinations, and changes in emotions, movements, and behavior. These symptoms can disrupt a patient's daily life, making it difficult to go to school or work, socialize, and complete other daily activities. Most people are diagnosed in their late teens to early 30s.

Bristol-Myers Squibb expects the twice-daily pill, which will be sold under the brand name Cobenfy, to be available in late October, executives told CNBC. Some medical experts say the drug is a much-needed new option for the approximately 3 million adults in the United States who suffer from schizophrenia.

Only 1.6 million of these patients are being 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, according to the drug company.

Cobenfy could also be a huge long-term sales opportunity for Bristol Myers Squibb, which is facing pressure to make up for the potential loss of revenue from top-selling treatments that will see its patents expire. The drug comes from the company's massive $14 billion acquisition of biotech company Karuna Therapeutics at the end of last year.

In a July research note, Guggenheim analysts said they viewed Copenfi as a “long-term, multi-billion-dollar opportunity” for the company. But the drug's launch will likely be slow, so it may not effectively contribute to Bristol-Myers Squibb's profit in 2024 and 2025, they said.

“I think there's probably going to be a real transformative moment in how we treat and talk about schizophrenia. And what we have, unfortunately, is an underserved population that oftentimes doesn't get the attention it deserves from a research and health care perspective,” Andrew Miller said. , founder and former head of R&D for Karuna Therapeutics and now an advisor to Bristol Myers Squibb, told CNBC.

He continued: “I think the most important moment will be five or ten years from now, when we look back and say we really made a difference.” “We helped people, improved outcomes, and gave caregivers and doctors another tool they can use.”

Bristol-Myers Squibb executives said Cobenfy costs $1,850 for a monthly supply, or $22,500 a year before insurance and other rebates.

They said pricing is in line with current oral schizophrenia treatments, and they expect most patients, especially those enrolled in Medicare and Medicaid plans, to have minimal out-of-pocket drug costs. About 80% of patients with the condition are covered by government insurance, according to Bristol-Myers Squibb.

The executives added that the company intends to launch a program aimed at helping patients afford Cobenvi.

It remains unclear to what extent this program will increase access for people without insurance.

Cobenfy will have to compete with some existing schizophrenia drugs — called antipsychotic treatments — at lower prices, especially generic knockoffs of brand-name treatments. For example, patients without insurance can get the generic version of an antipsychotic treatment called Abilify for $16 for 30 pills once daily with free GoodRx coupons.

Existing schizophrenia medications work by directly blocking dopamine receptors in the brain to generally improve symptoms in patients.

But it comes with a long list of potentially serious side effects that can cause patients to stop treatment, including weight gain, excessive fatigue, and uncontrollable involuntary movements. Nearly one-third of people with schizophrenia are also resistant to traditional antipsychotic treatments, according to WebMD.

Cobinvi is the first approved treatment from a new class of drugs that does not directly block dopamine to improve symptoms of schizophrenia, Dr. Samit Hirawat, chief medical officer at Bristol-Myers Squibb, told CNBC.

One part of Copinvi is a drug called xanomeline, which activates some so-called muscarinic receptors in the brain to reduce dopamine activity without causing the side effects associated with antipsychotics, he said. The second part of Cobinvi is called trospium, and it reduces the digestive side effects associated with xanomeline, such as nausea, vomiting, diarrhea, and constipation.

“The majority of these patients have already cycled one or two of these products,” Adam Lenkowski, chief marketing officer at Bristol-Myers Squibb, told CNBC. “So the enthusiasm we're hearing from doctors is an opportunity to get a patient to go into treatment without seeing side effects but also getting unprecedented efficacy.”

Lenkowski said the company expects Cobinvi to eventually become the standard treatment for schizophrenia as doctors learn more about the drug and become more comfortable prescribing it to patients.

The price may limit use of the drug for patients who have already tried and failed other existing treatments, said Nina Fadi, a clinical assistant professor of pharmacotherapy and translational sciences at the University of Texas at Austin College of Pharmacy.

“If it were up to me, I wouldn't necessarily say we should try X number of antipsychotics first. But I know from my experience in the hospital that that's probably what needs to happen because of the cost, mainly.” said Fadi, a psychiatric pharmacist who sees patients with schizophrenia at San Antonio State Hospital.

The approval was based on data from three clinical trials comparing Cobenvi to placebo, as well as two long-term studies that examined the drug's safety and tolerability for up to one year. Cobinfi met the main goal of all three trials, which was to significantly reduce schizophrenia symptoms compared to placebo, according to Bristol-Myers Squibb.

In studies, Cobenvi resulted mostly in mild to moderate side effects, which were mainly gastrointestinal and dissipated over time, Miller said.

Bristol-Myers Squibb said Thursday's approval for schizophrenia may be just the beginning for Copenfi.

For example, the company has ongoing late-stage clinical trials examining Cobenvi's potential in treating Alzheimer's patients with psychosis. Bristol-Myers Squibb said it expects to publish data from those studies in 2026.

The company also plans to study Cobinfi's ability to treat bipolar mania and irritability associated with autism.

“When we think about Copenfi, we think of it as multiple indications bundled into one product…because we're actually developing the drug not just for schizophrenia but for six other indications,” Hirawat said, referring to other potential uses for the drug.

— CNBC's Angelica Peebles contributed to this report.