Karuna Therapeutics Secures $68 Million Series B Financing to Advance KarXT, a Novel Cholinergic Receptor-Targeted Therapy for Neuropsychiatric Disorders

VCBeat (WeChat Official Account: vcbeat) has learned that on March 18, 2019, U.S. drug development company Karuna Therapeutics completed a $68 million Series B financing round, with ARCH Venture Partners as the lead investor. Other investors participating in this round included Fidelity Management and Research Company, Eventide Asset Management, Pivotal bioVenture Partners, Partners Fund Management, Wellcome Trust, Sands Capital, Alexandria Venture Investments, and PureTech Health. Heather Preston, M.D., Managing Director of Pivotal bioVenture Partners, has joined the Board of Directors of Karuna Therapeutics. Karuna Therapeutics plans to issue $5 million in equity upon conversion of debt to stock.

Karuna Therapeutics, also known as Karuna Pharmaceuticals, focuses on treating neuropsychiatric disorders involving muscarinic cholinergic receptors, including schizophrenia and Alzheimer’s disease. KarXT, short for Karuna-Xanomeline-Trospium, is a drug development program by Karuna Therapeutics targeting xanomeline and trospium chloride.

In placebo-controlled human trials, xanomeline has been demonstrated to have significant efficacy in schizophrenia and Alzheimer’s disease. Trospium chloride is an FDA-approved, effective muscarinic receptor antagonist that has been shown not to penetrate the central nervous system (CNS) during treatment, thereby avoiding CNS-related adverse effects. KarXT is designed to preferentially target M1/M4 muscarinic receptors in the brain while inhibiting stimulation of peripheral tissues, thereby significantly improving drug tolerability. KarXT has completed two Phase I clinical trials, which indicated that KarXT causes fewer side effects in patients compared with xanomeline monotherapy. A Phase 1b pain study in healthy volunteers and clinical work in Alzheimer’s disease are expected to begin later this year.

KarXT is Karuna Therapeutics’ lead candidate, currently undergoing Phase 2 clinical trials as a potential therapy for patients with acute psychosis associated with schizophrenia; results are expected to be announced by the end of 2019. The proceeds from this financing will enable Karuna Therapeutics to develop new formulations of KarXT, facilitate the expansion of KarXT into new areas of psychiatric disorders, and continue to build out the company’s infrastructure.

“Patients with schizophrenia are often limited to treatment options that only partially alleviate their psychiatric and cognitive symptoms, and these regimens are frequently associated with side effects. Karuna Therapeutics is committed to delivering more effective medical solutions to this large patient population. We believe this financing will propel Karuna Therapeutics to new heights, expanding the capabilities and significant potential of our muscarinic receptor platform,” said Steve Paul, M.D., Chief Executive Officer and Chairman of the Board of Karuna Therapeutics.

Robert Nelsen, Co-Founder and Managing Director of ARCH Venture Partners, stated, “Karuna Therapeutics has achieved significant milestones in its early development, including an ongoing Phase 2 clinical trial for the registration of treatments targeting acute psychotic episodes in patients with schizophrenia. The data also highlight Karuna Therapeutics’ strengths in addressing various central nervous system disorders. As investors focused on innovative companies, we are pleased to support Karuna Therapeutics in its next phase of growth.”

Karuna Therapeutics, founded in 2009 and headquartered in Boston, USA, is a drug development company focused on clinical-stage therapeutics, primarily developing treatments for psychiatric disorders. Established by PureTech Health, Karuna Therapeutics holds the global exclusive license to develop xanomeline and possesses a proprietary patent portfolio. The company has raised a total of $50.6 million across three previous rounds of financing.

Founded in 1986 and headquartered in Chicago, USA, ARCH Venture Partners primarily provides seed-stage and early-stage venture capital to technology companies. The firm mainly invests in companies co-founded with leading scientists and entrepreneurs, focusing on bringing innovative products in life sciences, physical sciences, and information technology to market, thereby enabling academic research institutions and national laboratories to pursue commercialization. ARCH Venture Partners currently manages seven funds with total assets under management of nearly $1.5 billion. It has provided the earliest rounds of venture capital financing to more than 120 companies, with a total of 288 investments. The firm’s current investors primarily include pension funds, endowments, financial institutions, and private investors.

(Compiled by Wang Shuijing)