Karuna Therapeutics slides after $400 mln stock offering launch

Karuna Therapeutics

21/03/2023 14:14

** Karuna Therapeutics Inc's  KRTX.O  shares down 9.4% at
$165.31 as co looks to raise equity
    ** Co late Mon commenced $400 mln equity offering to fund
clinical trials of its schizophrenia drug, KarXT
    ** Goldman Sachs, JP Morgan and Morgan Stanley jt
bookrunners
    ** Shares on Mon fell 4.8% after co said the drug
significantly reduced symptoms in a late-stage trial, but
hypertension concerns weighed
    ** UBS cut its PT by $13 to $193, saying drug's high
discontinuation rate was surprising
    ** "We believe the discont rate of 37% (meaningfully higher
than 25% in prior studies) is hardly inspiring if KarXT's value
proposition is as a paradigm shifting drug in schizophrenia."
UBS analyst Ashwani Verma wrote in note  
    ** Patients likely to switch off KarXT at a "sizable" clip,
similar to other antipsychotics, Verma added
    ** Co, which has ~34.5 mln shares outstanding for roughly
$6.3 bln market cap through Mon, had $1.1 bln of cash at end-Dec
    ** With move on Tues, stock off ~16% YTD, but up 42% over
the past 12 months

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper@thomsonreuters.com
lance.tupper@tr.com 1-646-279-6380))