Karuna Therapeutics topped expectations Monday in a study of its schizophrenia treatment, and the biotech stock soared to a record high.
On the stock market today, biotech stock Karuna catapulted 71.8% to 241.19.
The company tested its drug in patients with schizophrenia for five weeks. At the end of the test, patients who received the drug showed a 9.6-point reduction on a scale of symptoms compared to the placebo recipients. The scale measures 30 items related to psychopathic behavior.
Wedbush analyst Laura Chico says investors were hoping for an improvement in the range of 7-8 points.
"This outcome appears to have more than met the bar and came close to replicating (an earlier test's) data," she said in a report to clients. "For our part, we look for clarity on the call surrounding launch strategy and how cognitive improvements will be further explored."
Biotech Stock Karuna Breaks Out
Karuna ran its study in 252 adults with schizophrenia also experiencing symptoms of psychosis. Patients either received the study drug, KarTX, or a placebo two times a day for five weeks.
In total, patients who received the treatment showed a 21.2-point reduction on a scale of symptoms vs. an 11.6-point reduction for placebo recipients. The results were statistically significant and sustained beginning after two weeks and through the end of the study.
The results "should silence any questions on effect size," Wedbush's Chico said. She kept her outperform rating and 178 price target on the biotech stock.
KarTX also proved safe. More than eight in 10 patients who received KarTX were able to titrate to the highest dose — meaning the side effects were tolerable. A similar number of KarTX and placebo patients dropped out of the study due to side effects.
Next up, Chico says Karuna is likely to ask for Food and Drug Administration approval in mid-2023.
Highly Rated Medical Stock
The biotech stock, which began trading publicly in 2019, rocketed to a record high Monday. Shares also broke out of a double-bottom base with a buy point at 144.53, according to MarketSmith.com.
Bullishly, Karuna stock has a Relative Strength Rating of 95. This puts the biotech stock's performance in the top 5% of all stocks, according to IBD Digital.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
