KRTX - Karuna Therapeutics extends decline on $400M stock offering

2023-03-21 06:49:26 ET

• Following a ~5% drop in the prior session despite a trial win, Karuna Therapeutics ( NASDAQ: KRTX ) shares continued to tumble in the pre-market trading Tuesday after announcing the start of a $400.0M offering of its common stock.
• The underwritten public offering is backed by joint book-running managers Goldman Sachs, J.P. Morgan, and Morgan Stanley.
• The company also expects to grant a 30-day option for underwriters to purchase an additional $60.0M of common stock. All shares in the proposed offering will be sold by Karuna ( KRTX ).
• The capital raise comes after the company announced that its lead candidate KarXT co-developed with its partner Zai Lab Limited ( ZLAB ), reached the primary endpoint in a Phase 3 trial for adults with schizophrenia.
• However, there were safety concerns as rates of treatment-emergent adverse events stood at 70% and 50% in KarXT and placebo arms, respectively.
• Read: Seeking Alpha contributor Zach Bristow argued in December that the company’s buyout prospects thinned after a leadership change announced late last year.

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