JPM: In conversation with Steve Paul, CEO of Karuna Therapeutics

Steve Paul, M.D., worked on central nervous system drugs at Eli Lilly, including Zyprexa and Cymbalta, as well as failed Alzheimer's disease prospect solanezumab. (Karuna Therapeutics)

SAN FRANCISCO—Having worked on drugs like Zyprexa and Cymbalta over his 17 years at Eli Lilly, Steven Paul, M.D., could have stayed on until the Big Pharma made him retire. He left in 2010 to “do something a bit more entrepreneurial”—he co-founded a pair of central nervous system-focused biotech companies and stepped up to lead a third.

One of those companies is Voyager Therapeutics, which is developing gene therapies for Parkinson’s disease, Huntington disease, amyotrophic lateral sclerosis and others. While Voyager focuses on a new type of treatment for these CNS diseases, the first biotech Paul founded, as well as his current company, were built around medicines he has touched before.

“The first company I founded was Sage Therapeutics, based on work in neurosteroids and neuroactive steroids I did way back at the NIH 25 years ago,” Paul, who goes by Steve, said at the annual J.P. Morgan Healthcare Conference. He studied a neurosteroid called allopregnanolone and published a paper on the compound in 1986. More than 30 years later, that compound, now called brexanolone and sold under the name Zulresso, scored FDA approval, a first for postpartum depression.

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RELATED: FDA panel backs Sage's postpartum depression drug in 17-1 vote

Paul left Voyager in 2018 to take the helm at Karuna Therapeutics, which was developing xanomeline, a program he had overseen at Lilly. The Big Pharma hoped it would improve memory in patients with Alzheimer’s, but discovered by accident that it had antipsychotic effects: “This drug had a modest effect on memory, but it had a very marked effect on psychosis and agitation in Alzheimer’s patients,” he said.

Lilly tested it in a small study of patients with schizophrenia but ultimately shelved the drug due to side effects. Xanomeline treats psychosis by activating two types of muscarinic acetylcholine receptor, but it also hits receptors in the gut, leading to nausea, diarrhea, and increased sweating and salivating. Karuna’s solution is to combine the drug with trospium chloride, a drug that blocks those receptors but doesn’t cross the blood-brain barrier.

“Trospium doesn’t get into the brain, so it blocks all xanomeline effects outside of the brain,” Paul said.

Karuna reported phase 2 data for the treatment, dubbed KarXT, in patients with schizophrenia-linked psychosis in November and plans to start a phase 3 trial by the end of the year.

RELATED: Karuna raises $42M to resurrect abandoned Lilly drug for schizophrenia

“We saw a very robust antipsychotic effect without the troubling side effects of all current antipsychotics,” Paul said. “There were no Parkinsonian side effects, no weight gain, which is all very, very important to differentiation.”

The company also expects, based on its current financing, to get its program in dementia-related psychosis through phase 2 and explore the analgesic effects of KarXT. It’s not going into pain studies right away, and instead looking at what kinds of pain the drug may be useful for. Its painkilling properties don’t work through opioid receptors and so, could become a tool against the opioid crisis.

Paul thinks the neuroscience arena is poised for a new wave of innovation like that seen in oncology over the past 15 to 20 years.

“Oncology changed dramatically based on science, based on biology … I feel it’s likely to happen. It happened in immuno-oncology,” Paul said.

After medicines like Prozac, Zoloft and Cymbalta made it to market, Paul said, there was a lack of innovation in the CNS space as that generation of drugs saw their patents expire.

“These drugs all became generic and people go where they see opportunity, so people invested very heavily in oncology and inflammatory diseases, where we made a lot of great inroads,” he said.

RELATED: Karuna hires another ex-Lilly scientist in quest to resurrect CNS drug

Despite the limitations of current drugs for conditions like depression and schizophrenia, or the lack of effective treatments for Alzheimer’s, some Big Pharmas have exited the space entirely, so Paul sees companies who have held on—like Johnson & Johnson and Biogen—as well as smaller players like Karuna, as stewards of change.

“Immuno-oncology didn’t start in Big Pharma—it started in small, innovative biotech companies,” Paul said.

“I became convinced that you needed to do this in a different setting and that innovation, as it’s been in gene therapy and oncology, will be driven by smaller companies,” he added.

Editor's note: This story has been updated to correct a quote about xanomeline's effect on memory in a 1997 study. The original quote said it had "no beneficial effect" on memory, when it actually had a modest effect.

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