KRTX - Karuna initiated Neutral at Cantor citing lead candidate KarXT

2023-03-08 08:46:08 ET

Cantor Fitzgerald launched its coverage on Karuna Therapeutics ( NASDAQ: KRTX ) with a Neutral rating and a $214 price target, citing its lead product candidate KarXT, an oral therapy which modulates muscarinic receptors in the central nervous system and other tissues.

The rating is issued as Karuna ( KRTX ) expects to release topline data from its Phase 3 EMERGENT-3 trial for KarXT in schizophrenia this month ahead of plans to submit a marketing application in mid-2023.

“…..we believe KRTX shares are fairly-priced ($198 as of 3/6) with high expectations of a positive read out, subsequent approval, and even long-lived franchise generated several billion in revenue, already priced in,” the analyst Charles Duncan wrote.

The analyst, however, highlights the positives of KarXT, noting that it approval will bring “a new era for treating psychosis-driven disorders,” given the differentiated mechanism of action, side effect profile, and safety issues of the current standard of care, which lead to poor compliance.

However, Duncan warns that emerging muscarinic candidates from Cerevel Therapeutics ( CERE ) and Neurocrine Biosciences ( NBIX ) with differentiated mechanisms and receptor selectivity “may complexify KarXT’s ultimate market share capture.”

Read: Seeking Alpha contributor Peter Way issued a Buy rating on Karuna ( KRTX ) last month, arguing that the psychiatric and neurological conditions the company has targeted “are receiving increased investing attention” in a post-pandemic world.

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