Puretech-backed Karuna makes Nasdaq debut with $89M IPO
Betting on the potential of two older drugs to fight Alzheimer’s and schizophrenia — Boston-based Karuna Therapeutics has priced its upsized initial public offering in the middle of the range, raising gross proceeds of about $89 million.
The company, which will debut on the Nasdaq under the symbol “$KRTX” on Friday, is working on the hypothesis that a combination of muscarinic acetylcholine receptor agonist xanomeline — an Eli Lilly $LLY castoff — and trospium chloride, an FDA-approved muscarinic receptor antagonist together will make an adept antipsychotic.
Once upon a time, star CNS researcher (and former Voyager chief) Steven Paul was at Lilly, where he worked on xanomeline. The drug is designed to target M1 and M4 receptors in the brain — but adverse events triggered by off-target effects soured the US drugmaker on the drug. Last August, he was one of the syndicates of investors including ARCH Venture Partners and the Wellcome Trust that backed Karuna.
Existing antipsychotic treatments work primarily by inhibiting D2 dopamine receptors. Muscarinic receptor agonists emerged in the 1990s as a potential alternative approach for treating psychosis — but the development of such therapeutics has been limited by undesirable side-effects that are triggered by the stimulation of muscarinic receptors in peripheral tissues.
Karuna — whose COO is MIT graduate Andrew Miller — contends that the addition of trospium chloride will counter the adverse event profile of xanomeline. The combined product, dubbed KarXT, is designed to make a beeline for muscarinic receptors in the central nervous system and to ignore peripheral tissues.
The lead experimental treatment is being tested as a treatment for psychosis in a mid-stage study with schizophrenia patients — data is expected by the end of the year. It is also in early-stage programs for other schizophrenia symptoms, Alzheimer’s-related psychosis and pain.
Other drugmakers have also been seduced by the potential of muscarinic receptors. For instance, Allergan $AGN inked a $3.3 billion deal to in-license M1 and M4 targeted drugs from Heptares in the spring of 2016.
Less than a year after raising $42 million, PureTech-backed Karuna laid the groundwork for a $75 million IPO earlier in June. Karuna originally filed to offer 4.4 million shares. On Thursday, the firm said it is offering 5.6 million at $16, the midpoint of the $15 to $17 range.
Social image: Steven Paul, Karuna