KRTX - Bronte Capital - Karuna Therapeutics: A Rare Mistake With A Natural Test Of Process

2024-02-21 07:15:00 ET

Summary

• We have been short Karuna Therapeutics (KRTX) for most of 2023.
• Karuna are developing a drug (which they have coined "KarXT") for the treatment of schizophrenia.
• Bristol-Myers Squibb, a major global pharmaceutical company, has just bid 14 billion dollars in cash to buy Karuna prior to KarXT being approved.
• We think this is unlikely and Bristol Myers management will wind up regretting it badly, but we have lost money on the short.

The following segment was excerpted from this fund letter.

Karuna Therapeutics ( KRTX )

December gave us a natural test of our shorting process. We have been short Karuna Therapeutics ( KRTX ) for most of 2023. Karuna are developing a drug (which they have coined "KarXT") for the treatment of schizophrenia. KarXT is a combination of a molecule abandoned by Eli Lilly because of severe side-effects (xanomeline) and a generic used to treat urinary incontinence (trospium)....

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