When markets closed Friday November 15, Karuna Therapeutics (KRTX.Q) was just another pharma-stock trading in the mid-teens trying to make drugs for patients with Alzheimer’s and Schizophrenia.
Neurodegenerative diseases, like those named above, are notoriously difficult to treat and are “rapidly increasing in prevalence.”
That said, whoever cracks the code first is going to make some money. A lot of it. And investors are coming along with them.
Biogen (BIIB.Q) stock jumped 28.3% in October after they decided to reboot the development of Aducanumb, Biogen’s solution for Alzheimer’s. Nothing proven, nothing cured. But the stock moved.
For those of you wondering, Aducanumb is hypothesized to help patients with Alzheimer’s by targeting beta-amyloid, the protein implicated in the disease’s development.
If you are wondering about the validity of Biogen’s findings then I suggest you read the story of Eli Lilly and Solanezumab.
Let’s get back to Karuna therapeutics and the incredible ride their stock provided for its shareholders.
November 18, they released results from their phase 2 clinical trials for their drug KarXT designed to help with acute psychosis in patients with Schizophrenia. The results were, well, they were positive. Enough that when the stock market opened Monday morning, KRTX had nearly doubled its value.
On positive results from its phase 2 trial, the stock went from $32.50 to as high as $100 a share.
It was like watching the last two minutes of Super Bowl XLIX as a Patriots fan: it’s exhilarating when you come out on top.
The initial bump was only the beginning of what would be one of the most euphoric 36 hours for Karuna execs. The stock market was the NFL and Karuna was Tom Brady in his prime: unstoppable and envied by all.
KRTX closed the day at a cool $96. Tuesday was a new day but much of the same for KRTX, reaching a $152.00 high and ending at $123.99.
The stock has been brought down to earth a bit today, closing at $108.95. However, for those of you with your calculators out, that’s still an increase of 616%. Especially considering it closed at $17.68 on November 15.
Before looking at the results from the aforementioned clinical trial, let’s have a moment of silence for anybody with a short position in KRTX going into Monday…
KarXT is going to advance to phase 3 clinical trials thanks in part to stellar results from the phase 2. The positive and negative syndrome scale (PANSS) is most widely used for rating Schizophrenia symptoms.
“Approved antipsychotic medicines on average report a difference of 9 to 10 points in PANSS score versus the placebo”, with a change as small as five point supporting approval of antipsychotics. KarXT was well tolerated and patient demonstrated a mean reduction of 11.8 points over placebo in total PANSS.
Even more impressive than that is the discontinuation rate of only 20% for KarXT versus 21% for the placebo.
Consider that at least one-third of patients with schizophrenia fail to respond to current treatments, with 74% of patients discontinuing within 18 months of initiation.”
KarXT has the potential to significantly help more than 21 million people worldwide suffering from Schizophrenia.
Does it justify a 616% increase in KRTX’s stock, especially considering the company is still pre-revenue?
That’s debatable, but what isn’t debatable is the market’s size. Fortune Business Insights projects the neurodegenerative disease treatment market will be worth $62B by 2026.