Karuna completes $42 million financing round

Published: 2-Aug-2018

Participants include ARCH Venture Partners, Wellcome Trust, PureTech Health, Steven Paul MD, and other undisclosed investors

Karuna Pharmaceuticals, focused on targeting muscarinic receptors for the treatment of disorders marked by psychosis and cognitive impairment, has completed a $42 million Series A financing round, including the issuance of $22m in shares upon conversion of debt into equity.

Participants included ARCH Venture Partners, the Wellcome Trust, Steven Paul MD, PureTech Health, and other undisclosed investors.

Karuna plans to use the proceeds from the financing to advance its lead product candidate, KarXT (Karuna-xanomeline-trospium chloride), including the initiation of a Phase II trial in patients with schizophrenia in the third quarter of 2018 and the expansion into other therapeutic areas, including a non-opiate pain indication.

“Karuna has all of the characteristics we look for in a game-changing CNS company. Its lead drug candidate has a unique mechanism of action for treating both psychosis and cognition, as well as an exciting non-opiate application for pain. These are therapeutic indications where there is a profound need for new treatments. We are excited about the clinical data that have already been generated, and we look forward to helping to drive the next chapter of growth,” said Robert Nelsen, cofounder and MD of ARCH Venture Partners.

KarXT is designed to improve tolerability and unlock the potential of muscarinic cholinergic receptor agonists that selectively target M1/M4 muscarinic cholinergic receptors in the brain while blocking their activation in tissues outside the brain.

Karuna is currently completing a second Phase I trial using a proprietary co-formulation of xanomeline, a muscarinic agonist Karuna exclusively licensed from Eli Lilly, which showed compelling efficacy in patients with schizophrenia and Alzheimer’s disease but had peripheral cholinergic side effects, combined with trospium chloride, a muscarinic antagonist that acts only in the periphery (outside of the brain and central nervous system).

The initial Phase I trial demonstrated a significant and clinically meaningful reduction in pre-specified cholinergic side effects with KarXT compared to xanomeline alone. The Phase II trial in patients with schizophrenia is designed to replicate and expand on previous efficacy and safety data with xanomeline in schizophrenia and Alzheimer’s disease.

“We greatly appreciate the support of our investors and their confidence in the potential of KarXT to be the first new and highly differentiated medicine in more than 50 years for the treatment of psychosis and cognitive impairment in psychiatric and neurological disorders,” said Dr Andrew Miller, cofounder and CEO of Karuna.

“We believe KarXT could be a promising new treatment that safely and effectively addresses the debilitating positive, negative, and cognitive symptoms of patients living with schizophrenia and other central nervous system disorders.”

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