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Karuna Therapeutics IPO: What You Need To Know

Shanthi Rexaline

Biotech investors seeking a play on the lucrative, yet hard-to-crack central nervous system disorder therapy market have an opportunity this week. 

The IPO Terms

Boston, Massachusetts-based Karuna Therapeutics, Inc. plans to offer 4.375 million shares in an IPO, with the pricing estimated between $15 and $17, according to the preliminary prospectus filed with the SEC.

The size of the offering is estimated at $70 million at the midpoint of the estimated price range.

The company has applied for listing the shares on the Nasdaq under the ticker symbol "KRTX."

Since Karuna qualifies as an "emerging growth company," it has elected to comply with some reduced public company reporting requirements.

Goldman Sachs, Citigroup, Wells Fargo Securities and Wedbush PacGrow are the underwriters for the offering.

The Company

Karuna focuses on developing novel therapies to address disabling neuropsychiatric conditions characterized by significant unmet need.

The company's lead product candidate KarXT is in a midstage trial for the treatment of acute psychosis in patients with schizophrenia. It expects to release top-line data from the trial in late 2019.

Karuna is also planning to initiate clinical trials of KarXT to evaluate its therapeutic benefit in other central nervous system disorders, including psychosis in Alzheimer's disease as well as pain.

Despite being a highly generic market, worldwide sales of antipsychotic drugs are estimated to exceed $14 billion by 2025, the company said.

The Finances

Karuna reported a pretax loss of $17.51 million in fiscal 2018 and $12.01 million for the three-month period ending in March 2019.

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