Karuna Therapeutics, Inc.

second quarter 2023 financial results conference call. All participants are in a listen-only mode. Please note that this call is being recorded. I'll now turn the call over to Alexis Smith, head of investor relations.

Thank you. Good morning, everyone, and thank you for joining our second quarter 2023 financial results conference call. I'm joined on the call today by Bill Meary, President and Chief Executive Officer, and Troy Gneldy, Chief Financial Officer, who will begin our call with a pair of remarks, as well as Andrew Miller, Founder and Chief Operating Officer, and Will Cain, Chief Commercial Officer, who will join Bill and Troy for the Q&A portion of our call. Before we begin, I encourage everyone to visit the Investors page of our website at investors.coronatx.com to find our press release and presentation related to today's call. Forward-looking statements related to our product development, regulatory, and commercialization plans, our research activities, and financial outlook may be presented during this call. Please refer to today's press release and our SEC filings for important risk factors that could cause our actual performance and results to differ materially from those expressed or implied in these forward-looking statements. And now, I'll hand it over to Bill.

Thanks, Alexis, and good morning, everyone. We're now midway through 2023 and have made excellent progress in terms of our MDA, advancing our development programs for new indications, and the pre-commercialization work for the anticipated launch of CAR XT in the second half of next year, assuming approval. First, I'll start with where we are on our MDA for schizophrenia and outline what's ahead. As we shared last quarter, we had a productive meeting with the FDA in April, where we discussed various aspects of our submission, including those related to our data package and timing. That meeting and the subsequent meeting minutes in May confirmed our key assumptions, and we continue to work towards a submission in September as planned. Here's where we are. The clinical data needed for the submission is in hand. This is data that we've generated across our three positive efficacy and safety trials, emergent one, two, and three. as well as the necessary long-term safety data from emergent four and five. This is the data that will make up the bulk of our clinical module. The data has been collected, cleaned, and analyzed, and now we're in the final stages of writing the ISE and ISS. Additionally, the other key technical sections of the NDA, including CMC, non-clinical pharmacology and toxicology, and human pharmacokinetics and bioavailability, are complete or near complete. Our NDA consists of several hundred thousand pages, and the team will start assembling, formatting, and publishing our submission document in the next several weeks. The NDA filing team at Karuna has done an excellent job to produce a timely and high-quality submission. As it relates to other aspects of our submission, we will be providing additional safety data from our ongoing trials at day 120, as discussed, and aligned on with the agency during our pre-NDA meeting. This includes the latest data from immersion four and five, as well as data from our Phase 1b ABPM trial, which completed enrollment ahead of schedule in the second quarter. Moving on to our other ongoing Phase 3 development programs, ARISE and ADEPT. In ARISE, we activated nearly 20 additional clinical trial sites in Bulgaria and Serbia last quarter. These sites, along with the existing U.S. sites, will support recruitment in the trial with data on track for the second half of next year. As we talked about, data from ARISE will be used to support a supplemental NDA for the adjunctive treatment of schizophrenia in 2025, assuming approval in schizophrenia next year. Adjunctive treatments are used extensively for serious mental health conditions, such as depression, bipolar disorder, and Alzheimer's, where there are multiple classes of drugs approved for treatment. CAR-XT has the potential to be the first and only adjunctive treatment for schizophrenia, which would be a major advance for patients and the field of psychiatry. Our ADEPT program evaluating CAR-XP in psychosis and Alzheimer's continues to advance as well. ADEPT-1, our randomized withdrawal trial, is underway and the first patient enrolled in ADEPT-3, the one-year open-label extension trial, last month. We will be initiating ADEPT-2, a double-blind placebo-controlled trial, in the coming months. Data from ADEPT-1 and 2 are anticipated in 2025. As a reminder, while the ADEPT program focuses on evaluating the efficacy and safety of CAR XT in treating hallucinations and delusions associated with Alzheimer's, we're also collecting data on other prominent symptoms, such as agitation, aggression, and cognition, which may inform future development efforts with CAR XT. This is an important third indication for us. The potential for CAR XT and psychosis related to Alzheimer's is as significant as that in schizophrenia, and we look forward to updating you on this program in the future. Beyond our three primary indications, we're evaluating additional opportunities for CAR XT and CIAS and AD agitation, as well as in autism and mania, and have ongoing formulation efforts related to LAI, QD, and BID dosing in the elderly. We have some work to do here and plan to share more updates on the status of these programs early next year. Since the start of the year, we've made excellent progress building our operational capabilities. We expanded key teams such as managed care, medical affairs, and started pre-commercialization activities that lay the groundwork for our anticipated launch next year. In the spring, we attended several key psychiatry congresses where we shared additional new data from our emergent program that further highlights CAR XT's unique and differentiated profile. We presented data from emergent three, where CAR XT demonstrated statistically significant improvement in the clinical global impression of severity score at all time points in the trial. Specifically, patients entered the study with an average CGIS score of five or six out of seven, meaning markedly or severely ill. By week five, approximately 40% of patients were rated a score of one, not at all ill, to three mildly ill, versus 22% in placebo. This is an important finding. The CGIS is a clinician's assessment of a patient's global functioning, which takes into account all available information, including symptoms, behavior, function, among other factors. In other words, it's a judgment about the total picture of the patient at each visit. It's more than a symptom checklist, and it correlates well with well-known research efficacy scales. We also shared exploratory data evaluating the effects of CAR XT on cognition from emergent two and three. Using the Cambridge cognition test to evaluate memory, attention, and executive function, we showed statistically significant improvements in cognition in the CAR XT arm relative to placebo in patients who were cognitively impaired at baseline. Further, CAR XT was not shown to impair cognition. These findings are consistent with our understanding of the M1-M4 mechanism, as well as prior clinical data generated with zanomaline and CAR-XT. This is an important finding given the prevalence of cognitive impairment among patients with schizophrenia is 70 to 90 percent, and there is no FDA-approved treatment. Cognition is an important predictor of improved functional outcomes and is a key treatment target in schizophrenia. While this is an exploratory analysis, we're encouraged by what we've seen and are actively assessing additional clinical work to explore CAR-XD's effect on cognition. In the fall, we'll be sharing more data analyses for EMERGEN III and the broader EMERGEN program, including PANS responder rates and PANS item analyses. These findings reinforce Previous published data from our emergent program where more than half of patients treated with CAR-XD experienced at least a 20% to 30% reduction of positive and negative symptoms of schizophrenia, including improvements on the five PANS martyr factors, such as disorganized thoughts, uncontrolled hostility, and depression and anxiety. Before we review second quarter financials, I wanted to spend a few minutes on the leadership updates we announced this morning, including the appointment of Jonathan Rosen as Chief Human Resources Officer. Jonathan joined us in July, bringing with him extensive experience and proven leadership in building highly effective growth-oriented teams. His appointment comes at a key time for us as we continue to recruit top talent and focus on transitioning to a fully integrated biotech company. We also announced the promotion of Jason Brown as Chief Financial Officer. Jason currently serves as Senior Vice President Finance and has extensive experience with all aspects of the finance function, FP&A, accounting, audit, and more. And he has also played an integral role in our business development efforts, from due diligence to deal evaluation and execution. He's known internally for his detail-oriented mindset and sound judgment. With that, I'd also like to share our gratitude to Troy for his commitment to the company over the past four years. He's been a key member of our executive leadership team, contributing financially and operationally to the company in numerous ways. He led our IPO, multiple successful equity financings, and helped build the core finance capabilities at Karuna. With the NDA submission well in hand and a strong balance sheet in place, this is a logical time for these transitions. I'd like to thank Troy again for his commitment and contributions to the company, and congratulate Jason and Jonathan on their new roles. And with that, I'll hand it to Troy.