Karuna Therapeutics Raises $89.2 Million in IPO to Advance Neuropsychiatric Drug KarXT for Schizophrenia and Cognitive Disorders

Recently, VCBeat (WeChat ID: vcbeat) learned from foreign media reports that Karuna Therapeutics (“Karuna”) completed an IPO raising $89.2 million. It is understood that the company filed its listing application in April 2019 and set the offering price range at $15 to $17 per share on June 17, aiming to raise $74.4 million. On June 28, Karuna officially listed on the Nasdaq Stock Market under the ticker symbol KRTX.

In its latest filing, Karuna stated: “We intend to use the net proceeds from this public offering, together with our existing cash, cash equivalents, and short-term investments, to advance research on treatments for schizophrenia, including ongoing Phase 2 clinical trials and planned Phase 3 clinical trials.”

It is reported that Karuna previously completed a $600,000 debt financing in June 2011, received an $8 million grant from Wellcome Trust in June 2018, closed a $42 million Series A financing round in August 2018, completed a $68 million Series B financing round in March 2019, and finished a $12 million Series B+ financing round in April 2019. According to Karuna’s financial reports, its pre-tax loss for 2018 was $17.51 million, while its pre-tax loss for the three months ended March 2019 was $12 million.

Karuna Therapeutics, founded in 2009 and headquartered in Boston, Massachusetts, USA, is dedicated to improving the lives of patients with schizophrenia, Alzheimer’s disease, and pain, as well as their families. The company is striving to develop treatments for neuropsychiatric disorders and has currently launched a Phase II clinical trial to evaluate the efficacy of KarXT in treating acute psychosis associated with schizophrenia, with expectations to obtain relevant data within this year.

In the 1990s, muscarinic receptor agonists emerged as a novel and promising therapeutic approach for psychiatric disorders and cognitive impairments. There are five distinct muscarinic receptors in the brain and peripheral tissues, which bind to the neurotransmitter acetylcholine. Karuna Therapeutics’ therapeutic strategy primarily focuses on targeting and stimulating muscarinic receptors within the central nervous system. Preferential stimulation of the M1 and M4 muscarinic receptors can alleviate negative symptoms of schizophrenia, such as emotional blunting, reduced social drive, avolition, as well as cognitive deficits related to memory and attention.

KarXT consists of xanomeline and trospium chloride. Xanomeline is a novel muscarinic M1 receptor-selective agonist that has demonstrated favorable therapeutic efficacy in clinical trials for schizophrenia and Alzheimer’s disease in humans. Trospium chloride is an FDA-approved muscarinic receptor antagonist capable of penetrating the central nervous system. KarXT preferentially targets and stimulates M1/M4 muscarinic receptors in the brain while inhibiting their stimulation in peripheral tissues, thereby improving tolerability.

Karuna also plans to complete Phase Ib clinical trials for the treatment of schizophrenia, Phase Ib and Phase II clinical trials for Alzheimer’s disease psychosis, and advance Phase Ib and Phase II clinical trials for pain disorders, while expanding its product pipeline.

Steve Paul, Chairman and Chief Executive Officer of Karuna, stated: “We thank all investors for joining us in our commitment to developing novel therapies for patients with neuropsychiatric disorders. Karuna will utilize the funds raised to further explore new indications for KarXT, advance the development of treatment regimens for acute psychosis associated with schizophrenia exacerbations (such as geriatric psychosis and related pain conditions), and develop products for early disease diagnosis.”

(Compiled by Tang Lulu)