Karuna Therapeutics is focused on developing xanomeline, a muscarinic agonist that Eli Lilly discarded years ago in response to a problematic tolerability profile. The rescue effort was underpinned by a belief that co-formulating xanomeline with another drug could tip the risk-benefit balance in favor of the treatment.
Late last year, a Phase II trial of the co-formulation, KarXT (xanomeline and trospium), in schizophrenia patients met its primary endpoint. Days later, Karuna raised $250m (€230m) from public investors.
With Karuna earmarking $75m for a Phase III trial of KarXT, the biotech has money to pursue other central nervous system (CNS) opportunities. Charles River Laboratories is set to benefit from Karuna’s extra financial firepower.
To move into drug discovery, Karuna has set up a new office in Indiana, US, and entered into a multi-year deal with preclinical contract research organization (CRO) Charles River.
Steve Paul, who worked on xanomeline at Lilly before going on to become CEO of Karuna, set out his hopes for the push into drug discovery in a statement to disclose the news.
Paul said, “We aim to build a pipeline of product candidates targeting key neurotransmitter receptors to treat a broad range of disabling and debilitating CNS disorders through highly differentiated pharmacology.”
Charles River will support that effort using its drug discovery and safety assessment platform. Karuna thinks the platform will help it take optimized drug candidates into clinical development.
For Charles River, the deal is further evidence of its ability to profit from investor interest in biotech. With money flowing into biotechs with limited in-house capabilities and no desire to add them, CROs are providing the infrastructure needed to discover drugs and move them into and through the clinic.
Charles River has been expanding its drug discovery operation to position itself to capture the work. Talking to investors on a fourth quarter results conference call earlier this month, Charles River CEO Jim Foster set out the ongoing role M&A are playing in its expansion strategy.
Foster said, “Discovery is an area of focus for M&A. We are interested in adding to our therapeutic area of capabilities. What you should pay attention to are the technology deals. We need to be, if not cutting-edge, close to it.”
To help it gauge which businesses to buy, Charles River is providing financing and serving as a partner to startups of interest. This allows Charles River to interact with a startup’s clients and learn whether the business is worth buying outright.