Some 3 million Americans, and approximately 24 million people worldwide, are likely looking forward to a pivotal date next month in which U.S. regulators are expected to decide on whether to approve a new — more innovative — schizophrenia drug.

What Happened: The U.S. Food and Drug Administration has set Sept. 26 as the date to give final approval to a new drug from Karuna Therapeutics.

Bristol Myers Squibb Co. (NYSE:BMY) bought Karuna for about $14 billion in late 2023.

The treatment has doctors and patients excited: up until now, schizophrenia drugs were notorious for their severe side effects.

According to Bloomberg's Gerry Smith, Karuna was able to take an Alzheimer's drug developed by Eli Lilly & Co. (NYSE:LLY) and pairing it with another drug.

"By stimulating the receptors inside the brain and blocking those outside, Karuna was able to treat the symptoms and limit the side effects," Smith writes in a newsletter.

Why It Matters: Schizophrenia affects approximately 1 in 300 people across the globe, according to the World Health Organization.

Less than half of patients stay on medications due to side effects like weight gain and drowsiness.

Karuna and other biotech and big pharma companies are now more keen on developing new treatments for this particular mental illness that have minimal side effects. Before, there hadn't been a new type of schizophrenia treatment in more than 70 years.

What's Next: Expect to hear progress on Cerevel Therapeutics' schizophrenia drug, emraclidine. AbbVie Inc. (NYSE:ABBV) acquired the company last year for $9 billion.

Neurocrine Biosciences (NASDAQ:NBIX) and Nxera Pharma Co. also have a schizophrenia treatment in the works.

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