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Karuna (KRTX) Lags on Q2 Earnings, Up 71% on Schizophrenia Data

·5 min read

Karuna Therapeutics KRTX reported a loss of $2.17 per share in second-quarter 2022, wider than the Zacks Consensus Estimate of a loss of $2.02 and the year-ago quarter’s loss of $1.17.

During the quarter, Karuna Therapeutics recorded $5.3 million as licensing revenue received from Zai Lab. It did not record any revenue in the year-ago quarter.

Quarter in Detail

For the reported quarter, research and development expenses were $52.5 million, up 117.4% from the year-ago figure, due to increased costs for developing Karuna Therapeutics’ clinical programs plus higher employee-related expenses.

General and administrative expenses also surged 71.8% year over year to $17.8 million due to higher employee-related costs.

As of Jun 30, 2022, KRTX had cash, cash equivalents and marketable securities of $407.4 million compared with $443.2 million on Mar 31, 2022.

Karuna Therapeuticsexpects its current cash balance to fund its operations for at least 12 months following the potential new drug application (NDA) submission to the FDA for the lead pipeline candidate, KarXT, in schizophrenia.

KarXT Meets Goals in Schizophrenia Study

Along with the earnings release, Karuna announced data from the phase III EMERGENT-2 study on KarXT in adults with schizophrenia. The study met its primary and key secondary endpoints

KarXT exhibited a statistically significant and clinically meaningful 9.6-point reduction in the Positive and Negative Syndrome Scale (PANSS) total score over placebo, thereby meeting the study’s primary endpoint. PANSS is a scale for measuring schizophrenia symptom severity.

The EMERGENT-2 study also met its secondary endpoint as KarXT demonstrated an early and sustained statistically significant reduction in both positive symptoms(like hallucinations or delusions) and negative symptoms (like,difficulty enjoying life or withdrawal from others) of schizophrenia. The drug’s safety profile was consistent with previously conducted clinical studies.

Shares of Karuna were up 71.8% on Aug 8 as investors cheered the above results. In the year so far, the stock has surged 84.1% against the industry’s fall of 18.0%.

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Zacks Investment Research


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The EMERGENT-2 study is a part of the broader EMERGENT clinical program, which is evaluating KarXT for treating acute psychosis in adults with schizophrenia. The program also consists of one completed phase II study (EMERGENT-1 study) and three ongoing late-stage studies, namely EMERGENT-3, EMERGENT-4 and EMERGENT-5, evaluating the efficacy and long-term safety of KarXT in adults with schizophrenia.

Topline data from the EMERGENT-3 study is expected in first-quarter 2023. Based on data from the EMERGENT program, Karuna expects to file a new drug application (NDA) with the FDA for KarXT as a treatment for schizophrenia in mid-2023.

Given the potential of KarXT over the existing standard-of-care therapies, Karuna Therapeuticsis also evaluating the candidate in the phase III ARISE study as an adjunctive treatment of schizophrenia in adults who experience an inadequate response to their current antipsychotic therapy. While KRTX is currently enrolling patients in this study, topline data is expected in first-half 2024.

Apart from schizophrenia, Karuna Therapeutics is developing KarXT as a potential treatment of dementia-related psychosis (DRP). KRTX initially focuses on developing KarXT to treat psychosis in AD, one of the most prevalent subtypes of DRP. KRTX remains on track to start the phase III ADEPT clinical program, which will evaluate the candidate for psychosis in elderly patients with AD. This program will consist of three late-stage studies, with the first one expected to start in third-quarter 2022.

Karuna Therapeutics, Inc. Price

 

Karuna Therapeutics, Inc. Price
Karuna Therapeutics, Inc. Price

Karuna Therapeutics, Inc. price | Karuna Therapeutics, Inc. Quote

 

Zacks Rank & Stocks to Consider

Karuna Therapeutics currently has a Zacks Rank #3 (Hold).

Other top-ranked stocks in the overall healthcare sector include Alkermes ALKS, Geron GERN and Morphic MORF. While Geron and Morphic sport a Zacks Rank #1 (Strong Buy) at present, Alkermes carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 30 days, estimates for Geron’s 2022 loss per share have narrowed from 38 cents to 36 cents. Loss estimates for 2023 have narrowed from 36 cents to 35 cents during the same period. Shares of Geron have surged 83.6% in the year-to-date period.

Earnings of Geron beat estimates in three of the last four quarters and missed the mark just once, witnessing a surprise of 1.07%, on average. In the last reported quarter, GERN delivered an earnings surprise of 18.18%.

In the past 30 days, estimates for Morphic’s 2022 loss per share have narrowed from $3.47 to $2.90. Loss estimates for 2023 have narrowed from $3.96 to $3.90 during the same period. Shares of Morphic have lost 33.1% in the year-to-date period.

Earnings of Morphic beat estimates in three of the last four quarters and missed the mark just once, witnessing a surprise of 48.29%, on average. In the last reported quarter, MORF delivered an earnings surprise of 183.95%.

Alkermes’ stock has risen 10.7% this year so far. Alkermes’ estimates for 2022 have gone up from a loss of 17 cents per share to earnings of 20 cents per share, while the consensus estimate for 2023 earnings has increased from 31 cents per share to 50 cents per share in the past 30 days.

Alkermes beat earnings estimates in each of the last four quarters, delivering an average earnings surprise of 325.48%, on average. In the last reported quarter, ALKS reported an earnings surprise of 50.00%.


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