Karuna raises $42M to resurrect abandoned Lilly drug for schizophrenia

Karuna Pharmaceuticals has the cash it needs to start mid-stage trials of an Eli Lilly drug, shelved because of side effects, as part of a combination therapy for schizophrenia and Alzheimer’s.

The PureTech-incubated biotech said it has raised $42 million in first-round funding to fund the phase 2 trial of experimental muscarinic M1/M4 agonist xanomeline co-formulated with trospium chloride, a muscarinic antagonist used for years to treat urinary incontinence.

Lilly was developing xanomeline for patients with schizophrenia and Alzheimer’s disease in the 1990s but, despite signs of efficacy in phase 2, dropped the program because the drug caused unwanted side effects affecting the peripheral nerves that caused a 50%-plus dropout rate at higher doses in trials. Attempts to improve the side-effect profile by increasing the selectivity of muscarinic agonists fell short, and interest in M1 and the related M4 target waned.

Karuna picked up rights to xanomeline thinking that combining it with trospium—which works outside the central nervous system—might counteract those side effects without impairing its therapeutic ability.

The combination has been badged up as KarXT (Karuna-xanomeline-trospium chloride) and in phase 1 has been shown to reduce side effects compared to xanomeline alone. With the new cash in hand, Karuna intends to start a phase 2 trial in schizophrenia in the third quarter and start exploring options in Alzheimer’s as well as other potential applications such as pain relief.

Other companies are also looking at muscarinic agonists for schizophrenia and dementia, notably Sosei unit Heptares, which has M1, M4 and M1/M4 agonists in early development partnered with Allergan in a $3.3 billion deal signed two years ago. Their lead candidate, M1 agonist HTL18318, has reached mid-stage testing in dementia with Lewy bodies, the second-most common form of degenerative dementia after Alzheimer’s.

Karuna’s CEO Andrew Miller, Ph.D, reckons KarXT has the potential to be "the first new and highly differentiated medicine in over 50 years for the treatment of psychosis and cognitive impairment in psychiatric and neurological disorders."

He added: "We believe KarXT could be a promising new treatment that safely and effectively addresses the debilitating positive, negative, and cognitive symptoms of patients living with schizophrenia and other central nervous system disorders."

Participants included ARCH Venture Partners, former Lilly researcher Steven Paul, M.D., PureTech, and the Wellcome Trust, which provided an $8 million grant to the company for the phase 2 schizophrenia trial in June, having previously backed its phase 1 proof-of-concept study with $3.8 million.

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