Arch-backed biotech hauls in a fast B round as its reborn anti-psychotic zooms to a PhII finish line

by john carroll — on March 18, 2019 06:33 AM EDT
Updated: 06:38 AM

Steven Paul, CEO, Karuna

Steve Paul has booked a $68 million clinical round for his single asset anti-psychotic biotech now in a Phase II study for schizophrenia. And with $110 million in total announced venture backing in 7 months, this one — Karuna Therapeutics with a combo drug stylishly dubbed KarXT — is shaping up as a possible turn into the fast lane to Wall Street, 2018 style.

Paul, you may recall, completed a lengthy development stint at Eli Lilly, where he spent a considerable amount of time beating his head against the stone wall of Alzheimer’s as the pharma giant burned through billions in its misguided efforts to come up with a blockbuster drug for that disease. One of those drugs he studied was the muscarinic receptor agonist xanomeline, an anti-psychotic which was shelved with many others due to some serious side effects. Karuna is combining that old drug with trospium chloride (Sanctura) to control the side effects, looking to follow up with clinical data to back them up ahead of what would have to be an ambitious pivotal plan to get through to a marketing approval.

As the A round came through last August, the elder and more experienced 35-year vet Paul elbowed company founder Andrew Miller aside for the CEO post, with Miller staying on as COO. And the company has laid out plans for getting this drug to the market for both schizophrenia as well as Alzheimer’s, which we all know is no easy target — even for anti-psychotics.

“We did see an effect on memory,” Paul told me last summer, “similar to Aricept. What was quite surprising, we measured psychotic symptoms in a demented elderly subgroup that had psychosis. And what we saw was a nice dose-dependent reduction in paranoia, vocal outbursts and so on, compared to placebo.”

At that time the biotech was still virtual, with only 6 FTEs and a cast of supporting players in the outsourcing world. Now there’s more than $100 million riding on their ability to reproduce the good results, without any repeat of the bad anticholinergic adverse effects you might expect to see in a muscarinic acetylcholine receptor agonist.

It shouldn’t take too long to find out what they have. The biotech’s randomized Phase II, with 180 patients, should wrap in early November, according to 

ARCH’s Bob Nelsen led the latest round, with this big group coming in behind: Fidelity Management & Research Company, Eventide Asset Management, Pivotal bioVenture Partners, Partner Fund Management, Wellcome Trust, Sands Capital, Alexandria Venture Investments, and founder PureTech Health.

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