Karuna Therapeutics extends decline on $400M stock offering
Daniel Grizelj
- 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 faded after a leadership change announced late last year.