Bristol Myers Sheds 6% After Promising Schizophrenia Drug Flops In Phase 3 Test

Bristol Myers Squibb (BMY) faced a significant setback in early April 2025 when its experimental schizophrenia drug, Cobenfy (xanomeline and trospium chloride), failed its Phase 3 ARISE trial. The stock plummeted 6% in after-hours trading, reflecting investor disappointment with the trial’s primary endpoint failure. While the immediate reaction was negative, the data revealed nuances that could redefine Cobenfy’s therapeutic potential—and perhaps soften the blow to Bristol Myers’ pipeline.

The Trial Failure: A Missed Target, But Not a Total Loss

The ARISE trial aimed to evaluate Cobenfy as an adjunctive treatment to existing antipsychotics in patients with inadequately controlled schizophrenia symptoms. The primary endpoint—reducing the Positive and Negative Syndrome Scale (PANSS) total score by Week 6—was not met. Cobenfy’s 2.0-point reduction in PANSS scores (vs. a 1.5-point reduction for placebo) yielded a p-value of 0.11, statistically insignificant.

Yet, subgroup analysis revealed a critical silver lining: patients on non-risperidone antipsychotics (e.g., paliperidone, aripiprazole) saw a statistically significant improvement (p=0.03), while those on risperidone did not. This suggests Cobenfy’s efficacy may depend on the background antipsychotic, opening doors to targeted patient populations.

Safety and Regulatory Outlook: A Known Profile, New Opportunities

Cobenfy’s safety profile in the trial aligned with previous studies, with common side effects like nausea, constipation, and tachycardia. However, its contraindications—including urinary retention and glaucoma—limit its use in certain patients.

Bristol Myers now faces a strategic crossroads. While the FDA is unlikely to approve Cobenfy as an adjunct to risperidone, the non-risperidone subgroup’s success could support a narrower indication. The company also emphasized Cobenfy’s prior success in four monotherapy trials, suggesting standalone use might still be viable.

Diversifying Cobenfy’s Pipeline: Beyond Schizophrenia?

The real wildcard is Bristol Myers’ pivot to explore Cobenfy in other neuropsychiatric conditions, such as Alzheimer’s disease and autism spectrum disorder. Xanomeline, the drug’s active component, selectively targets muscarinic acetylcholine receptors, which are implicated in cognitive and behavioral disorders.

If these trials succeed, Cobenfy’s commercial potential could expand significantly. For context, the global schizophrenia drug market is projected to reach $6.5 billion by 2028, but the broader neuropsychiatric space (including Alzheimer’s) is valued at over $40 billion, offering a compelling upside.

Investor Implications: A Setback, Not a Catastrophe

While the 6% stock drop reflects immediate disappointment, Bristol Myers’ broader portfolio remains robust. Its cancer therapies (e.g., Opdivo, Breyanzi) and recent acquisitions (e.g., Turning Point Therapeutics) provide stability. The Cobenfy failure is a blow to near-term growth expectations but doesn’t derail the company’s long-term prospects.

Analysts estimate that Cobenfy’s peak sales, had it succeeded as an adjunct, could have reached $500 million annually. However, its potential in other indications or as a monotherapy could still generate meaningful revenue. Investors should monitor upcoming data from ongoing trials and regulatory discussions closely.

Conclusion: Silver Linings in a Cloudy Trial

The ARISE trial’s failure is undeniably a setback for Bristol Myers, but the data underscores a path forward. The subgroup effect and prior monotherapy success suggest Cobenfy isn’t a total loss. With a 6% stock drop, the market has priced in pessimism, but the drug’s flexibility across indications and patient populations could yet deliver returns.

For now, Bristol Myers’ broader pipeline and financial strength mitigate near-term risks. Investors should view the stock dip as an opportunity to position for potential rebounds if Cobenfy’s repurposing strategies pan out. The lesson? In drug development, even failed trials can yield clues to unmet needs—and the next big breakthrough.

Data as of April 2025. Market projections sourced from EvaluatePharma and Grand View Research.