Karuna Therapeutics, a US-based, neuropsychiatric-focused spinoff from pharmaceutical company PureTech Health, has gone public in an upsized $89.2m initial public offering on the Nasdaq Global Market.
The offering consisted of approximately 5.58 million shares priced at $16.00 each, in the middle of the IPO’s range. Karuna increased the number of shares in the offering from almost 4.4 million.
Unnamed existing investors expressed interest in buying $30m of shares, though it is unclear if they did so. The company’s shares opened at $18.50 on Friday and closed at $20.02, valuing it at about $456m.
Karuna is developing drugs that will treat neuropsychiatric conditions with an unmet medical need, and will put $55m of the IPO proceeds into completing a phase 2 clinical trial for a drug candidate that will address psychosis in schizophrenia, and beginning a phase 3 trial.
A further $24m has been earmarked for completion of a phase 1b trial and initiation of a phase 2 trial for psychosis in Alzheimer’s disease, $5m for a phase 1b trial for schizophrenia symptoms and $20m to finish a phase 1b trial for the treatment of pain and the start of a phase 2 trial.
The offering follows $123m in funding across two rounds, one of which was a $42m series A round in August 2018 featuring PureTech, Arch Venture Partners, Wellcome Trust and Steven Paul, a venture partner at VC fund Third Rock Ventures, with $22m consisting of $22m of debt converted into equity.
Karuna closed a series B round in April this year sized at $82.1m according to its IPO filing, with capital from investors including PureTech and Pivotal BioVenture Partners, which was co-founded by property development group Nan Fung.
Financial services and investment group Fidelity Management & Research, Sofinnova Investments, Arch Venture Partners, Wellcome Trust, Eventide Asset Management, Partner Fund Management and Sands Capital also participated in the series B.
PureTech remains the company’s largest shareholder, despite its stake being diluted from 43.5% to 32.8% in the offering. The company’s other large investors are Arch Venture Partners (14% post-IPO), Wellcome Trust (5.6%) and Sofinnova Investments (4.6%).
Goldman Sachs and Citigroup are joint book-running managers for IPO while Wells Fargo Securities is a joint book-running manager and Wedbush PacGrow is a co-manager. They have a 30-day option to buy almost 837,000 more shares, boosting its size to nearly $103m.
