After a hiring blitz, Karuna nabs $68M funding round

Steven Paul
The biotech's CEO Steve Paul. (Karuna Pharmaceuticals)

Boston startup Karuna Therapeutics has raised a chunky $68 million just six months after getting off a $42 million series A as it looks to beef up work on its Alzheimer’s/schizophrenia combo therapy.

The PureTech-incubated biotech nabbed $42 million in a series A last summer, and will use this and its latest cash boost for a phase 2 trial of experimental muscarinic M1/M4 agonist xanomeline, co-formulated with trospium chloride, a muscarinic antagonist used for years to treat urinary incontinence.

There’s a lot of history behind the former drug: Eli Lilly was developing xanomeline for patients with schizophrenia and Alzheimer’s disease in the 1990s but, despite signs of efficacy in phase 2, dropped the program because the drug caused unwanted side effects affecting the peripheral nerves that caused a 50%-plus dropout rate at higher doses in trials.

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Attempts to improve the side-effect profile by increasing the selectivity of muscarinic agonists fell short, and interest in M1 and the related M4 target waned.

But then in stepped Karuna, who picked up rights to xanomeline thinking that combining it with trospium—which works outside the central nervous system—might counteract those side effects without impairing its therapeutic ability.

The combination has been badged up as KarXT (Karuna-xanomeline-trospium chloride) and in phase 1 has been shown to reduce side effects compared to xanomeline alone.

Other companies are also looking at muscarinic agonists for schizophrenia and dementia, notably Sosei unit Heptares, which has M1, M4 and M1/M4 agonists in early development partnered with Allergan in a $3.3 billion deal signed two years ago.

Their lead candidate, M1 agonist HTL18318, has reached mid-stage testing in dementia with Lewy bodies, the second-most common form of degenerative dementia after Alzheimer’s.

RELATED: Karuna names Lilly veteran, ex-Voyager CEO Steven Paul as leader

With the new cash in hand, Karuna will test KarXT in schizophrenia while start exploring options in Alzheimer’s, as well as other potential applications such as pain relief, and will also use the funds toward an “expansion of the pipeline,” the company said, as well as “building the company infrastructure.”

As well as a decent amount of funding, it’s also been building up the team, poaching Steven Paul, the Sage and Voyager co-founder who worked on xanomeline at Lilly, as CEO last year.

And just last week, Christian Felder came on board as VP of discovery research, also reuniting Felder with xanomeline, which he also helped through early development while at Lilly.

The latest financing was led by ARCH Venture Partners, with participation from Fidelity Management & Research Company, Eventide Asset Management, Pivotal bioVenture Partners, Partner Fund Management, Wellcome Trust, Sands Capital, Alexandria Venture Investments and founder PureTech Health.