Shares of Karuna Therapeutics (KRTX 1.92%) were up 14% late Wednesday morning on news regarding the company's lead therapy. The clinical-stage biopharmaceutical company, which focuses on therapies affecting the central nervous system, has seen its shares rise by 52% over the past year but fall 11% so far in 2023.
The healthcare company on Tuesday released the third positive trial result regarding KarXT, a therapy to treat adults with schizophrenia. The latest trial, KarXT's Phase 3 EMERGENT-3 trial, met its primary endpoint, the company said, showing an 8.4-point reduction on the Positive and Negative Syndrome Scale total score compared to a placebo. The company said it plans to file a New Drug Application with the Food and Drug Administration (FDA) midway through 2023 with a potential launch as early as the second half of 2024. The drug differs from other schizophrenia treatments in that it seems to have fewer side effects than typical antipsychotic drugs. The stock jumped on the news, even though Karuna also used the jump to say it planned to sell $400 million of stock at $161.33 per share, diluting the value of the stock to current shareholders.
In its fourth-quarter report, the company said it had $1.1 billion in cash, enough to fund operations through the end of 2025. The company is using the positive news regarding KarXT to sell more stock, further boosting the company's cash position. This will help Karuna develop and market KarXT, if the drug is approved by the FDA, and advance its other lead pipeline drug, KAR-2618, a drug for mood and anxiety disorders that is currently in a phase 1 trial. Last year, Karuna had only $10.6 million revenue and lost $276.3 million, due to higher research and development costs.