Old drug repurposed for Schizophrenia could reap Alzheimer’s windfall

The path to discovering a blockbuster drug is often unpredictable. A promising molecule might be overlooked for decades, only to regain attention when new scientific insights spark fresh interest from pharmaceutical companies.

Such is the case with newly approved Bristol-Myers Squibb drug Cobenfy. The underlying drug was first studied in Alzheimer’s patients in the 1990s, but it was abandoned because of severe side effects. Decades later, it was repurposed for schizophrenia, and last month it was approved for use by the U.S. Food and Drug Administration, making it the first new antipsychotic to come to market in decades.

Now, it could come full circle. Bristol-Myers is studying Cobenfy’s effects in Alzheimer’s patients, and late-stage clinical trial results are expected in 2026.

Cobenfy’s circuitous route to market can be traced back to an Eli Lilly study published in 1997. The idea was to investigate whether its drug, xanomeline, could provide cognitive and behavioral benefits to Alzheimer’s patients. Although the drug demonstrated promising efficacy, Eli Lilly discontinued the project because of significant side effects, such as vomiting and nausea.

Years later, Andrew Miller, then a chemistry Ph.D. graduate from MIT in his late 20s, came across the study and was impressed by its effects on psychotic symptoms. He theorized that combining xanomeline with a second existing medication could mitigate some of the unwanted gastrointestinal side effects. This concept inspired him to found Karuna Therapeutics in 2009, with backing from the venture-capital firm PureTech.

Xanomeline is part of a class of drugs that target muscarinic receptors in the brain, which play a crucial role in various cognitive functions, including memory, mood and emotion. But muscarinic receptors are also found in the peripheral nervous system, such as in the gastrointestinal tract. So Karuna combined the drug with trospium chloride—an approved medication for overactive bladder—which selectively blocks muscarinic receptors in the body without crossing the blood-brain barrier.

The result was a drug that allows the potent activity in the brain to proceed while neutralizing the problematic side effects in the body. Last year, Bristol-Myers Squibb acquired Karuna for $14 billion, which proved to be a smart bet following the FDA approval last month of Karuna’s lead product.

Schizophrenia is a challenging medical and social issue for which there has been very little innovation by the pharma industry. The chronic brain disorder, which can cause people to suffer delusions and hallucinations, affects about 2.8 million adults in the U.S.

The large size of the market has injected renewed enthusiasm for Bristol-Myers shares, which have underperformed the broader pharma industry in recent years. Bristol-Myers stock is up nearly 8% over the past month. Analysts expect the drug to reach more than $4 billion in annual sales within a decade, according to data on Visible Alpha.

But part of those estimates are baking in uses beyond schizophrenia. Bristol-Myers and competitor AbbVie are also testing whether this class of drugs can help relieve psychotic symptoms in Alzheimer’s patients. Essentially, they aim to replicate the positive effects observed in Eli Lilly’s studies nearly 30 years ago, but without the harsh side effects.

Miller notes that while conditions such as schizophrenia, dementia and bipolar disorder have very different underlying causes, their symptoms can overlap. “There is this idea that psychosis is an issue of perception, heavily involving the prefrontal cortex and how we filter and process information and perceptions,” he said in an interview. “I believe that this aspect is conserved across different underlying conditions.”

Alzheimer’s psychosis refers to a range of symptoms, including hallucinations, delusions and agitation. A significant chunk of Alzheimer’s patients experience some form of psychosis during the course of their illness. Treatment options include antipsychotic medications such as Seroquel, although doctors are reluctant to prescribe them because of “black box warnings,” which indicate that a drug carries significant risks of serious side effects, such as a higher risk of death in elderly patients with dementia-related psychosis.

That explains why the absence of a black box warning in the FDA approval last month prompted enthusiasm on Wall Street for the treatment of Alzheimer’s symptoms. Given that the market for Alzheimer’s patients experiencing psychotic symptoms is in the millions, it could be just as large, if not larger, than the schizophrenia market. Evan Seigerman, an analyst at BMO, sees the Alzheimer’s indication for the drug overtaking schizophrenia. He estimates that Cobenfy will eventually garner $3.9 billion in annual Alzheimer’s sales in addition to $2.4 billion in sales for schizophrenia.

Cobenfy’s approval was a major victory for the schizophrenia community. And, perhaps, for Alzheimer’s patients, too.

Write to David Wainer at david.wainer@wsj.com