Karuna Therapeutics Shares Rip Higher After Schizophrenia Drug Aces Midstage Trial

Shares of the thinly traded, small-cap biotech Karuna Therapeutics Inc KRTX were moving higher Monday on a positive clinical trial readout.

What Happened

Boston, Massachusetts-based Karuna said the Phase 2 clinical trial that evaluated its lead candidate KarXT for the treatment of acute psychosis in patients with schizophrenia met the primary endpoint.

KarXT is an oral co-formulation of xanomeline, a muscarinic receptor agonist, and trospium, a muscarinic receptor antagonist, which acts through preferential stimulation of muscarinic receptors in the central nervous system.

The company said KarXT demonstrated a statistically significant and clinically meaningful 11.6-point mean reduction in total Positive and Negative Syndrome Scale, or PANSS, score compared to placebo, while also showing good overall tolerability.

Discontinuation rates between KarXT and placebo were similar, according to Karuna. 

The secondary endpoints of a statistically significant reduction of PANSS-Positive and PANSS-Negative scores were also observed, the company said. 

Why It's Important

KarXT has the potential to be a new option for treating the symptoms of debilitating central nervous system, or CNS, disorders such as schizophrenia without producing problematic side effects associated with current antipsychotic standard of care therapies, according to Karuna. 

"The effectiveness of antipsychotics has been limited by the frequent and serious side effects of first- and second-generation drugs which are difficult for many patients to tolerate, are potentially harmful, and lead to high rates of discontinuation and relapse," Jeffrey Lieberman, a member of Karuna's scientific advisory board, said in a statement. 

"In addition to its novel mechanism of action, KarXT could be a new therapeutic option that has the potential to offer robust efficacy devoid of weight gain, metabolic effects and extrapyramidal side effects."

What's Next

Karuna said it expects to hold an end-of-Phase 2 meeting with the FDA in the second quarter of 2020.

Following the meeting, the company intends to initiate a Phase 3 trial by the end of 2020.

The company also said it plans to further analyze the Phase 3 results to understand the potential of KarXT in patients with schizophrenia experiencing negative and cognitive symptoms; other CNS disorders such as psychosis in Alzheimer's disease; and in the management of pain.

The stock was up 133.94% at $41.36 at the time of publication Monday. 

The company went public in late June, offering 5.58 million shares at $16 each. 

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